Nestlé on Monday added to the list of potential candidates to succeed Peter Brabeck as chief executive with the surprise appointment of a former top Procter & Gamble manager as its next chief financial officer.
The choice of Paul Polman, a 49-year-old Dutchman who until June headed P&G’s European operations, came unexpectedly. Equally surprising was the announcement that Wolfgang Reichenberger, Nestlé’s existing CFO, would step aside from January to run a new venture capital fund for the group.
Mr Brabeck, who earlier this year was involved in a controversy over corporate governance after assuming Nestlé’s chairmanship while remaining chief executive, is expected to step down from the latter position in the next two to three years.
This has fuelled speculation about a successor to Mr Brabeck, 61. Attention has focused on several members of the executive board, such as Paul Bulcke, current head of North America.
However, yesterday’s appointment of an top outsider immediately left analysts wondering whether Mr Polman, credited with turning round P&G in Europe, was being groomed as a successor. Officials said Mr Polman, a 26-year P&G veteran, had left because of an unwillingness for family reasons to take up a new headquarters appointment in Cincinnati.
“We think Polman has been hand-picked to succeed Brabeck,” said Jon Cox of Kepler Equities.
Nestlé declined to comment on the move. “Any speculation about the next chief executive of Nestlé is just that – speculation,” said François Perroud, company spokesman.
Speculation was fuelled by the fact that Nestlé, the world’s biggest foods group, hardly lacks executive talent and traditionally grooms talent internally. Mr Brabeck has said his successor would be a member of the executive board, suggesting Mr Polman might be poised to take over after a couple of years.
Analysts added that said such high-level job changes between companies, especially in overlapping businesses, were rare. While Nestlé and P&G do not compete directly in most of their businesses, there they are rivals in pet-care and cosmetics, where Nestlé has a big stake in L’Oréal.
Officials admitted that Mr Polman’s move was sufficiently sensitive to have warranted discussion between the Nestlé and P&G chairmen. To avoid a direct competitive challenge, Nestlé said Mr Polman would not have responsibility for L’Oréal.
Mr Reichenberger will run a new fund, to invest SFr500m ($64m) over the next five to seven years in science and nutrition businesses that might eventually be incorporated into Nestlé or developed separately.
The initiative is an extension of Nestlé’s existing venture capital fund, which has SFr180m seed capital for new businesses. The new Growth Fund will take some of these businesses, as well as others from outside the company, to the next stage of their development.
Nestlé stressed his move was at his own request – he wanted to run his own operation after five years as CFO. In that period, He has been identified as a driver ing force of the group’s improved profitability through higher productivity and better financial controls.