Good morning. English-Dutch food giant Unilever ousted its CEO Hein Schumacher this week, after barely one-and-a-half years on the job, andvreplaced him with the company’s CFO, Fernando Fernandez. It begs the question: what went wrong at Unilever—and can Fernandez succeed?
Officially, Unilever’s CEO swap happened because the company’s board was “eager to step up the pace of [its] strategy execution” after the post-COVID price inflation rush, which temporarily boosted Unilever’s profits, came to an end. (Unilever’s strategy to improve performance included streamlining its so-called “power brands” portfolio, including Dove soap, Rexona deodorant, and Knorr soup, while avoiding large acquisitions.)
It also follows some difficult decisions Schumacher made, such ascpulling out of Russia belatedly after several twists and turns, and listing its ice cream business (including Magnum and Ben & Jerry’s) in the Netherlands, instead of the U.S., which some board members were pushing due to the higher valuations that consumer retail stocks often attract in America. In all, it’s hard not to see the hand of activist investor and Unilever board member Nelson Peltz and his investment firm Trian in this week’s decision.
In a statement provided to CEO Daily on Wednesday, Peltz made a clear endorsement of the new CEO: “Trian believes continued operational improvements and sustained financial outperformance should drive Unilever’s valuation multiple higher. […] Fernando Fernandez has the right skills and expertise to accelerate the company’s growth action plan.”
Since Peltz came on the scene three years ago, there has certainly been change: three CEOs have been at the helm, and nearly half the board has been replaced. The financial picture has been mixed. Since June 2022, the stock price rose 15%, in line with the FTSE 100 index, but it remains below its 2019 peak. Results for 2024, announced last week, showed slow sales growth and a (steep) decline in profits. And for 2025, the company said it expected “subdued” market growth to continue.
But there are plenty of skeptics who think Peltz’s methods for improving short-term financial results often don’t work, including Yale University’s Jeffrey Sonnenfeld. In a Fortune commentary piece last year, he called Peltz “America’s most overrated activist investor”, arguing that “roughly 70% of his board intrusion resulted in those companies underperforming the S&P 500.”
While Unilever’s previous CEO Paul Polman embraced a purpose-centric approach, for Peltz, whether a company is “mission-driven” is not material: before taking on Unilever, he was involved with Kraft-Heinz, a company whose shareholder primacy approach Polman said “could not have been more different” than Unilever’s.
In the end, one company insider told me, they are unsure Peltz’s involvement has done the company any good. “It’s a typical example of corporate America coming to Europe and impatiently chasing short-term returns,” they said. “They should have never let Peltz in.” — Peter Vanham
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Contact CEO Daily via Diane Brady, diane.brady@fortune.com, LinkedIn.
This story was originally featured on Fortune.com
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