REUTERS: Consumer goods giant Reckitt Benckiser has named PepsiCo CEO Laxman Narasimhan as its next CEO, making it the industry's latest heavyweight, turning to an outsider to tackle weak growth and new media competition.
Narasimhan, PepsiCo's global chief commercial officer, is the first external candidate to become Reckitt's CEO since the birth of Durex condoms, Nurofent tablets and Dettol cleaners in 1999.
The 52-year-old will join Reckitt as designated CEO and will be appointed to the Executive Board on 16 July. He will be appointed CEO on September 1, replacing Rakesh Kapoor, 60, who has led Reckitt for more than eight years and holds the position in January. He would retire this year.
The appointment is the latest in a range of external attitudes as major consumer goods companies seek to catch up with smaller brands that have sold better online and associated with social media millennials, while facing investor pressure to increase efficiency.
Analysts had selected Aditya Sehgal, head of the health department of Reckitt, and Rob de Groot, president of the hygiene department, as potential internal successors to Kapoor.
In addition to industry challenges, Reckitt has suffered corporate setbacks in recent years, including a security scandal in South Korea, a failed product launch and a cyberattack.
Kapoor launched a restructuring plan called RB 2.0 to divide the group into two business units – one for health and one for hygiene and household products – under the same parent company.
Reckitt said Wednesday that Narasimhan will be tasked with implementing the plan, which will be completed in 2020. However, some analysts suggested that he might have other ideas.
"The appointment of a new, external CEO will raise questions about the timing of the end of the Group's RB 2.0 plan and whether it will eventually lead to a split in the business," said Robert Waldschmidt, an analyst at Liberum.
Jefferies analyst Martin Deboo questioned why a company already smaller than its competitors, Procter & Gamble and Unilever, wanted to "decalcify itself", which could affect its competitiveness in emerging markets.
Reckitt's shares have barely changed in the morning trade.
Nevertheless, at least three analysts welcomed the appointment of Narasimhan.
"Narasimhan's strategic and leadership background makes him a strong partner for Reckitt, and we believe he will provide both the company and the investor a new perspective," wrote Richard Taylor, an analyst with Morgan Stanley, in a note.
Narasimhan, Chief Commercial Officer at PepsiCo, led strategy, global category groups and global research and development.
Prior to that, he led beverage companies in Latin America, Europe, and sub-Saharan Africa, managing annual sales of $ 14.5 billion ($ 18.5 billion). Previously, he was also Chief Financial Officer of Americas Foods.
Narasimhan studied mechanical engineering in India before moving to the US to obtain an MBA. Before joining PepsiCo, he worked for McKinsey for two decades.
As CEO of Reckitt, Narasimhan receives a salary of £ 950,000 and is eligible to participate in the Company's annual bonus plan with a target of 120 percent salary.
PepsiCo appointed Ram Krishnan, currently CEO Greater China, as the new Chief Commercial Officer.
(Reporting by Siddharth Cavale and Muvija M, editors of Saumyadeb Chakrabarty and Mark Potter)