The Scoop: Investors left ‘gobsmacked’ after Unilever’s abrupt CEO ouster

Unilever surprised investors on Tuesday by ousting well-regarded CEO Hein Schumacher after less than two years on the job. 

Schumacher’s departure led to Unilever’s shares falling by as much as 3.4% that day. Despite a slight rebound Wednesday the price hasn’t reached pre-announcement levels yet.

“We are gobsmacked at the news that Unilever’s very highly regarded CEO Hein Schumacher is to step down,” RBC Capital analyst James Edwardes Jones said, according to Reuters.

Sources close to the leadership change indicated that the move wasn’t the result of anything “untoward.” Instead, the change was due to a desire to speed up Unilever’s recent underperformance.

Despite Schumacher’s efforts to implement changes, including cost cuts and plans to spin off divisions of the company, the board believed CFO Fernando Fernandez was better suited to drive the strategy forward, per the Reuters report. Fernandez is a 40-year veteran of Unilever, so there is some familiarity in leadership going forward.

Company Chairman Ian Meakins said Fernandez impressed the board with his “decisive and results-oriented approach.”

Why it matters: With any leadership change, there are two main questions a company needs to answer: Why and why now?

For Unilever, the answer to both questions is it wants quicker execution of its turnaround strategy.  Though light on specifics, sources looked to stress that the replacement was in a better position to achieve goals faster.

“While the Board is pleased with Unilever’s performance in 2024, there is much further to go to deliver best-in-class results. Having worked with Fernando closely over the last 14 months, the Board is very confident in his ability to lead a high performing management team, realize the benefits of the [Growth Action Plan] with urgency, and deliver the shareholder value that the company’s potential demands,” Meakins said in a statement.

While a definite response to the move, it’s definitely not an answer as to why it happened. It’s vague, jargon-heavy and doesn’t appear to be much of an initial justification move to either investors or analysts.

Diana Radu, equity analyst at Morningstar, described the move as “unexpected” in a conversation with CNBC. 

Meakins even praised Schumacher for leading a “significant productivity programme and the commencement of the Ice Cream separation, both of which are fully on track. The Growth Action Plan has put Unilever on a path to higher performance.”

“There’s nothing in the company’s recent performance to warrant such a move,” she said, who described his tenure as being marked by “greater focus” and “disciplined execution.”

Bringing Fernandez in might suggest Unilever is going for a more aggressive, results-focused approach, but the lack of clarity around Schumacher’s departure could leave some investors feeling uncertain, especially those who were optimistic before. 

Now, Unilever has the tricky job of convincing the market that this change will boost performance, not cause more instability.

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Casey Weldon is a reporter for PR Daily. Follow him on LinkedIn.