A brutal ousting at Unilever? Not really. Boards shouldn’t be sentimental about chief executives | Nils Pratley

Most removals of chief executives from FTSE 100 companies follow the same script. Financial results disappoint; the share price falls; improvement is promised but doesn’t materialise; the shares fall further; a beleaguered board, harassed by the shareholders, finally pulls the plug. The process tends to take ages. The exit of Hein Schumacher from Unilever is nothing like that.

First, he’s been in the job for little more than 18 months. Second, the numbers for 2024 were OK, even if the revenue line for the fourth quarter was weak-ish. Third, the share price hasn’t been crashing – it’s up 10% since Schumacher’s appointment. Nor does there appear to have been a quarrel over strategy, even if the choice of Amsterdam for the primary listing of the soon-to-be-demerged Magnum and Ben & Jerry’s ice-cream division will not have been universally popular.

Instead, if the official script is taken at face value, this an unusual case of the board simply deciding that the chief financial officer could do a better job. The clue was in chair Ian Meakins’ praise for the new boss, Fernando Fernandez: “The board has been impressed with Fernando’s decisive and results-oriented approach and his ability to drive change at speed.” Translation: Schumacher wasn’t driving fast enough.

The prompt may have been the factor suspected by Barclays’ analysts: the experienced Fernandez, a former boss of Unilever’s Dove-to-Vaseline personal care division, would have been “in high demand” from US rivals offering fat pay packets. So, if the board was less than 100% convinced by Schumacher’s ability to find the accelerator, this was a moment to switch.

Precipitous? Brutal? Not really. Chief executives aren’t paid the big bucks – up to €17.4m (£14.4m) this year in Schumacher’s case – to feel comfortable in their posts. There has to be a sense of jeopardy. Boards are allowed to make a clinical judgment that a better appointment is available. It’s what they are supposed to do.

Schumacher’s short reign included his productivity-boosting “growth action plan”, the announcement of 7,500 job cuts, the ice-cream demerger, and a shake-up in senior ranks. None of those were minor tweaks, but there is also a fair argument that the reset wasn’t fully convincing to the outside world.

The rise in the share price under Schumacher still left the rating short of peers’, which played to the perennial grumble about Unilever. It is a company blessed with well-invested famous brands that never quite manages to punch its financial weight. Meakins’ line that “there is much further to go to deliver best-in-class results” was merely a statement of the obvious.

And the pet complaint from this column about Schumacher was that, for all his supposed straight-talking, he was overly fond of yawn-inducing babble about “strategic cells”, “critical platforms” and “end-to-end responsibilities”. Fernandez’s version of blunt-speaking may be an improvement. As a near-40-year company veteran, he may also be better placed to sing a version of Unilever’s “social purpose” refrain while being ruthlessly commercially minded.

Meakins himself escapes the charge of flip-flopping over chief executives because Schumacher was appointed by the old chair, Nils Andersen. Instead – and oddly – it is Nelson Peltz, the hard-nosed activist in the boardroom, who has some explaining to do. It rather looks as if he was beguiled by the idea that only an outsider such as Schumacher could deliver shock treatment to Unilever. It’s not always so. The new chief executive still has to deliver, of course, but changing drivers at this stage looks a reasonable call.