Reckitt Benckiser CEO Laxman Narasimhan steps down; replacement search begins

Shares in the maker of Durex condoms and Dettol cleaning products declined 5.7%, as the news of the departure of a CEO who steadied the UK consumer goods company after a turbulent period under his predecessor, disappointed investors.

55-year-old Narasimhan joined the company in September 2019 from PepsiCo and was the first external candidate to take the helm at Reckitt since it was formed in 1999.

He led the household goods maker through the pandemic, which boosted sales of its health and hygiene products, and as the company navigated a baby formula crisis in the US.

The digital-savvy CEO has revamped the consumer health business, best known for making Nurofen pain relief tablets, which had gone from a strength to an area of investor concern under Kapoor. 

Narasimhan also took strategic moves to sell parts of the portfolio like the firm’s infant formula business in China.

Narasimhan decided to leave for personal reasons and to relocate to the United States, having been approached with a new opportunity there, Reckitt informed without elaborating.

All you need to know about Nicandro Durante

Durante, who is the senior independent director at present, will step into the role of CEO while the board considers a longer-term replacement for Narasimhan, who’s leaving to pursue a new opportunity in America where his family home is located.

It’s a surprise move for an executive who only joined in 2019 and was making headway in restructuring the company and unwinding the missteps of former chief Rakesh Kapoor, most notably the highly priced takeover of Enfamil infant formula maker Mead Johnson.

Durante, 65, is the longest-serving board member at the consumer goods company and was previously British American Tobacco Plc’s chief executive officer. 

The executive, who holds both Italian and Brazilian citizenship, spent most of his career at the tobacco company, working in various roles in the UK, Hong Kong and Brazil, before running the group for nine years until 2019.

When he left BAT, with a generous exit package, he said he didn’t plan to take on another FTSE 100 executive role and wanted to be with his family in Brazil.

Reckitt said Durante will move from Brazil to the UK and receive relocation expenses and a salary of £1.1 million ($1.3 million). He’ll be eligible for a bonus and participation in the company’s long-term incentive programme.

‘DOUBLE WHAMMY’

“It’s kind of a double whammy of uncertainty about what’s ahead, given that (Narasimhan) was three years at the company and at a time when market conditions are tougher, especially for companies like Reckitt Benckiser, which are highly reliant on consumer spending,” said Hargreaves Lansdown analyst Susannah Streeter.

The news of Narasimhan’s departure is disappointing given the ongoing changes and improvements just starting to happen at Reckitt, said James Edwardes Jones and Emma Letheren at RBC. They added that they “also can’t help but think that an ex-tobacco executive doesn’t seem well placed at the head of a company focused on consumer health.”

“It was a surprise to find out Reckitt’s CEO is stepping down, having only been in the role for three years and just starting to receive some credibility,” said Tineke Frikee, fund manager at Reckitt shareholder Waverton Investment Management.

“It is surprising that it is immediate, rather than serving his notice period … a handover period between Laxman and a new permanent CEO replacement would have been preferred.”

Post your comment
First article