Consumer goods group Reckitt Benckiser has picked PepsiCo executive Laxman Narasimhan as its next chief executive, becoming the latest industry heavyweight to turn to a company outsider to tackle faltering growth and new media-savvy rivals.
Narasimhan, PepsiCo’s global chief commercial officer, is the first external candidate to be appointed as CEO at Reckitt since the maker of Durex condoms, Nurofen tablets and Dettol cleaners was formed in 1999.
The 52-year-old will join Reckitt as CEO-designate and be appointed to the board on July 16. He will become CEO on Sept. 1, replacing Rakesh Kapoor, 60, who has led Reckitt for more than eight years and said in January he would retire this year.
The appointment is the latest in a series of external hirings as major consumer goods groups look to make up ground lost to smaller brands that have done a better job selling online and connecting with millennials on social media, while also facing investor pressure to boost efficiency.
Analysts had tipped Reckitt’s health division operations chief Aditya Sehgal and hygiene home president Rob de Groot as potential internal successors to Kapoor.
As well as industry challenges, Reckitt has faced company-specific setbacks in recent years, including a safety scandal in South Korea, a failed product launch and a cyber attack.
Kapoor launched a restructuring plan, dubbed RB 2.0, to split the group into two business units – one for health and one for hygiene and home products - under the same parent company.
Reckitt said on Wednesday Narasimhan would be charged with delivering the plan, due to be completed in 2020, but some analysts suggested he might have other ideas.
“The appointment of a new, external CEO is bound to raise questions regarding the timing of the end of the group’s RB 2.0 plan and whether it will ultimately lead to a split of the company,” Liberum analyst Robert Waldschmidt said.
Jefferies analyst Martin Deboo questioned why a company already smaller than rivals Procter & Gamble and Unilever wanted to “descale itself”, which could hobble its ability to compete in emerging markets.
Reckitt’s shares were little changed in morning trading. Still, at least three analysts welcomed Narasimhan’s appointment.
“Narasimhan’s strategic and leadership background make him a strong fit for Reckitt. We believe he will bring a fresh perspective to both the business and to investors,” Morgan Stanley analyst Richard Taylor wrote in a note.
Narasimhan led Strategy, Global Category Groups and Global R&D in his capacity as Chief Commercial Officer at PepsiCo.
Prior to that, he headed the beverage maker’s Latin America, Europe and Sub-Saharan Africa operations managing annual sales of 14.5 billion pounds ($18.5 billion) and at one time was also Chief Financial Officer of the group’s Americas Foods business.
Narasimhan studied mechanical engineering in India before moving to the United States to get an MBA. Before joining PepsiCo, he worked at consultants McKinsey for two decades.
As CEO of Reckitt, Narasimhan will get a salary of 950,000 pounds and will be eligible to participate in the company’s annual bonus plan with a target of 120% of salary.