Reckitt Benckiser chief executive Laxman Narasimhan will step down at the end of September after three years in the role, the company said on Thursday, taking investors by surprise and sending its share price down sharply.
Narasimhan will be replaced temporarily by senior independent director and former BAT boss Nicandro Durante while the board "evaluates and selects the future leadership", Reckitt said in a statement.
Shares in the maker of Durex condoms and Dettol cleaning products tumbled more than 4% on the news. JP Morgan analysts cited Narasimhan's sudden departure just when investor confidence in the group's turnaround was improving.
"It was a surprise to find out Reckitt's CEO is stepping down, having only been in the role for three years and just starting to receive some credibility," said Tineke Frikee,
Taking the Helm
fund manager at Reckitt shareholder Waverton Investment Management.
Narasimhan, 55, joined the company in September 2019 from PepsiCo and was the first external candidate to take the helm at Reckitt since it was formed in 1999.
He led the household goods maker through the pandemic, which boosted sales of its health and hygiene products, and as the company navigated a baby formula crisis in the United States.
"It's disappointing to someone who has followed the stock for a long time," said Ashish Sinha, portfolio manager at Reckitt shareholder Gabelli. "Reckitt was getting its mojo back."
The British consumer goods group has raised its annual revenue forecast in July after steep price increases helped the company to beat its second-quarter sales expectations.
Brazilian-Italian Durante previously led tobacco giant British American Tobacco (BAT) for eight years until 2019. He joined Reckitt's board in 2013.
The 66-year old will receive a salary of £1.1 million ($1.3 million) as Reckitt CEO, the company said, adding that he is being appointed on a rolling contract with six months' notice on either side.
Chairman Chris Sinclair and the nomination committee have started the process to identify "the best long-term candidate to take Reckitt on its next phase of growth", the company said.
Reckitt, which also makes Nurofen tablets and Lysol cleaning products, will continue to implement its current strategy under Durante, the company added.
Narasimhan decided to leave for personal reasons and to relocate to the United States, having been approached with a new opportunity there, Reckitt said without elaborating.
Neither Narasimhan nor Durante responded to requests for comment via their LinkedIn accounts.