In a surprise move, Reckitt Benckiser today announced CEO Bart Becht will step down in September, ending a 16-year run that's been among the longest and most consistently successful in consumer packaged goods.
Mr. Becht, 54, will be 55 when he turns over duties on Sept. 1 to Rakesh Kapoor, 52, currently exec VP-category development, which oversees marketing and product development throughout RB. Mr. Becht will remain a consultant to Mr. Kapoor for a year after that, the company said.
Mr. Kapoor joined RB in 1987 in India. Since 2006 he has led the company's "Powerbrands" strategy, focusing marketing and product development on leading brands. He's also led an innovation program that has seen 30% of 2010 RB revenue come from products launched in the past three years. He was introduced to investors broadly for the first time when RB presented its annual results in February.
But he'll have a tough act to follow in Mr. Becht, who over 16 years managed the merger of Reckitt & Colman with Benckiser and turned the combined companies into one of the most-consistent growers in the industry. Only former L'Oreal Chairman-CEO Lindsay Owen-Jones, who led that company for 18 years through 2006, and former Colgate-Palmolive Co. Chairman-CEO Reuben Mark, who led his company for 23 years through 2007, have had similar leadership runs in recent decades.
"We are very surprised," said Sanford C. Bernstein analyst Andrew Wood in a research note. He had just upgraded the company to "outperform" last week after a meeting with Mr. Becht only two weeks ago in which the CEO gave no indication of an imminent departure. "He argued that he was still passionate about the business," Mr. Wood said in the note. "He added that there was a clear succession plan 'in case I get run over by a bus.'"
That bus never arrived, but news of Mr. Becht's retirement hit RB's stock hard as shares fell 7% today. Investor worries were compounded by the fact that the company had a change of chief financial officer last year with the departure of Colin Day and arrival of former Tesco executive Liz Doherty.
Mr. Wood, who reiterated his upgrade, said Mr. Kapoor "did a fairly decent job" in his February performance, "but there was no sense that he was the CEO in waiting. RB has been driven by the star CEO/CFO team for a decade, and, of course, investors should be worried by the departure of the two of them within 12 months."
In a conference call with analysts and investors on Thursday, RB Chairman Adrian Bellamy said Mr. Becht had only informed the board he had definite plans to retire one week ago, but had previously indicated a desire to retire someday. Much of the call involved Mr. Bellamy and Mr. Becht portraying the succession as both sudden yet well thought-out.
Mr. Bellamy said Mr. Kapoor in recent years had risen to the top of the list of succession candidates during semi-annual succession-planning reviews by the board. He said Mr. Day, the former CFO, also had been considered "but he never got to the top of the list such as Rakesh did.
"We did not do a formal search," Mr. Bellamy said. "But we know of the personalities in this business well enough to be able to determine whether we felt Rakesh could do a better job."
"The timing has very much to do with the fact that we now have a very strong executive committee in place," Mr. Becht said, calling it "probably the best team since the merger" in 2000.
Mr. Bellamy said Mr. Becht is restrained by a non-compete clause from going to work for a competitor during the period of his consultancy ending Sept. 1, 2012.
But Mr. Becht said: "There is no chance that I'm going to join a competitor."
He said he will not be taking a full-time executive position but "will stay active in the corporate world. In terms terms of exactly what I will be doing, I have not determined yet 100%, and it's not ready for disclosure." He said he'll also be working more on a number of charitable causes.
"Of course, I am passionate about the business," Mr. Becht said in response to Mr. Wood's note. "Why wouldn't I be? It's a great business ... and I will continue to be passionate about the business until Aug. 31." He added: "Passion does not mean that you cannot retire at some point in time."
Faced with questions about the disclosure of the move, Mr. Bellamy said, "I understand some of the frustration here, but I can't send up a flag every time the CEO says, 'Well, maybe I want to retire or maybe we should sell this business or maybe we should do something else.'"
RB ranked as the eighth-largest global media spender in Advertising Age's 2010 list, based on measured media spending of $2.2 billion. RB reported $1.5 billion in marketing spending on $13.8 billion in global sales last year.
Havas' Euro RSCG is RB's lead creative agency globally, with sibling Havas Media splitting global media duties with Publicis Groupe's Zenith Optimedia, which handles North America.