By John Reville, Oliver Hirt and Richa Nadio
Zurich/London (Reuters) -Nestle’s recent announcement that Paul Bulke Chairman will withdraw, followed by the increasing concern of investors over the price of the food group’s shares, the mandate of previous CEO Mark Schneider and refers to its corporate governance.
Support for Bulke, 70 -year -old, is diverging due to doubts about Nestle’s recovery after the pandemic, when sales volumes are placed in 2023, as the largest packaged food producer in the world has increased prices to compensate for increasing cost of raw materials, four investors said in Nestle.
There was also dissatisfaction with Bulke’s loyalty to Schneider during this difficult period, as well as Nestle’s practice to make former chairmen of CEO, they said. Schneider was eventually downloaded last August and replaced by a veteran by Nestle Laurent Freixe.
The manufacturer of the Nescafe Instant Coffee and Kitkat Chocolate Bars said on June 18 that Bulcke, CEO from 2008 to 2016, will withdraw as chairman in April 2026 and will be replaced by Vice -President Pablo Isla, a former chairman of the Spanish Modern Major CEO and CEO
“Nestle is not in a crisis regime, but this is the right time to change,” says Igo Spice, the head of sustainability and corporate management at Deka Investment, a top-30 investor at Nestle, who voted against Bulke on this year’s AGM on April 16.
“We are great supporters of the independent chairmen, but after being on board for more than a decade, Bulke was no longer independent,” Straich added. “Nestle looked too much like a closed store in the past.”
Bulcke was not available to comment on this story.
His departure will mark the end of the nearly 50-year career, which made him rise from the marketing trainee to the very top.
Responding to Reuters’ request for a comment on this story, Nestle spokesman Christoph Mayer said Bulke chose not to seek re -election at a time when Freixe was well established and the company’s strategic direction was clear and firm.
“This time guarantees a smooth transition, providing sufficient time and space to establish the new leadership team,” Mayer said, noting that the company has reviewed its inheritance plans in June.
But the time of Bulke’s exit – announced shortly after he was re -elected for another year and a year before his compulsory retirement age – it was unusual, analysts and investors say.
Bulcke, chairman of 2017, had to retire in 2027 according to Nestle rules.
Several investors from the top 30 have told Reuters that they have been dissatisfied with Bulke for years, with some looking for his departure either privately or at shareholders meetings.
“The time is right for Mr. Bulke to give way for a long time,” said one who refused to be baptized.
Maintaining Bulcke shareholders is decreasing. In April, he won a re -election of 84.8% support for shareholders. Although obviously essential, it was well below the flat chairs usually in Switzerland. In 2017, he received almost 96%.
“It was a clear sign that many investors no longer appreciate it,” the investor said. “He should not have been the chairman first – we do not like the CEO to become a chairman without cooling periods.”
Fresh start
Two previous powerful Presidents of Nestle, Peter Brabeck and Helmut Maucher were also CEO.
“The chairmen who are former executives can be resistant to change,” says Kuno Slavler, a corporate management expert at St. Galen University, Switzerland.
Shareholders also criticized Bulke’s decision to keep Schneider when Nestle’s performance fought after 2022.
Adding to anxiety were scandals such as the use of Nestle from banned procedures to purify bottled water in France and problems with the supply chain in the United States. But when Schneider was finally released, it came as a shock.
“Safe companies like Nestle should never surprise the market,” a shareholder said. “The former CEO made road strikes with investors shortly before he had to go.”
Shareholders were also concerned about the effectiveness of the group’s shares – which fell 42% between 2022 and 2024 – lagging rivals such as Unilever and Danone, which won 15% and 19% respectively.
Investors were also worried about high debt, which threatened future payments. The net debt at the end of 2024 was 2.9 times corrected revenue before interest, taxes, depreciation and depreciation, compared to 2.5 times at the end of 2023.
“The shareholders only want one thing: it comes back. And if they are not there, then people are unhappy,” said an investor.
Investors and analysts said the incoming chairman ISLA showed a strong leadership in the owner of Zara Inditex, cheering a potentially new approach to stimulating growth in Nestle.
One of ISLA’s first priorities will be to determine the profile of the next CEO, said Vontobel analyst Jean-Philip Bertshi. Freixe is 63, so questions are raised about how long it will stay in the highest work.
Other tasks will include a solution to what to do with approximately 40 billion euros of Nestle (47.11 billion) of the French giant of L’Oreal cosmetics and whether to maintain a struggling frozen food business.
“We need better performance at Nestle,” said Simon Jege, a portfolio manager at Nestle Investor Flossbach Von Storch. “Therefore, it is a good idea to have a sip of fresh air in the position of chairman.
“Inditex is one of the best-managed companies in the ultra-concomplete sector. Pablo Isla has played a leading role in this. And since he already knows Nestle, he is a good solution.”
($ 1 = 0.8490 euro)
(John Reville Report, Oliver Hirt in Zurich and Richa Naido in Londoninging by Dave Graham and Susan Fenton)
