Reckitt Benckiser CEO Bart Becht steps down to be replaced by Rakesh Kapoor
Reckitt Benckiser CEO Bart Becht steps down to be replaced by Rakesh Kapoor
Reckitt Benckiser CEO Bart Becht steps down to be replaced by Rakesh Kapoor
After spending more than a decade building Reckitt Benckiser Group PLC into a household-products powerhouse, Chief Executive Bart Becht said he will retire later this year. The news surprised shareholders and drove the company's shares down 7.5%.
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Departing Reckitt CEO Bart Becht will stay on as a part-time adviser until September 2012 to help ensure a smooth transition.
Reckitt, the U.K.-based company behind products like Lysol, Woolite and French's mustard, said Thursday that Mr. Becht, 54 years old, would step down on Sept. 1 and hand the top job to Rakesh Kapoor, 52, executive vice president of global category development. The move comes less than six months after Reckitt announced that its chief financial officer, Colin Day, would depart after more than 10 years on the job. Mr. Day left the company last month.
The result is uncertainty about Reckitt's upper ranks for shareholders. Reckitt will essentially be in the hands of a new chief executive and finance chief for the first time since it was formed. Messrs. Becht and Day had run the company since it was born out of a 1999 merger between Reckitt & Colman PLC and Benckiser NV. Since then, the share price has grown from about 600 pence to more than 3,000 pence, or about $50, making it one of the FTSE 100's best-performing companies.
For years, Reckitt consistently posted sales growth that was as much as double the industry average, in part by focusing on niche segments and rolling out new product innovations. Its portfolio has come to include all manner of lucrative, if unglamorous products, such as Clearasil acne cream, d-Con mousetraps, Harpic toilet cleaner and Veet hair remover.
Reckitt "has been driven by the star CEO/CFO team for a decade and, of course, investors should be worried by the departure of two of them within 12 months," Andrew Wood, senior analyst at Sanford C. Bernstein & Co., said in a note Thursday. Bernstein has retained its "outperform" rating on the stock.
Heard on the Street
The worry was visible in the market Thursday. In London, Reckitt's shares fell 251 pence, or 7.5%, to 3,115 pence. Reckitt's steep decline sliced roughly $3 billion off the company's value, which now totals $37 billion.
Mr. Becht, who is Dutch, will stay on as a part-time adviser until September 2012 to ensure a smooth transition. He became CEO of Benckiser in 1995 and later took the helm of the merged company in 1999. He has also worked at Procter & Gamble Co.
"I've been doing this for 16 years. Sixteen years is a long time," Mr. Becht said Thursday. "I think I deserve a change, a new challenge, a new intellectual challenge, and I think the company deserves a fresh leader."
Mr. Becht said there was "no chance" he would join a competitor and ruled out the possibility of taking another full-time executive position. He said he planned to stay active in the corporate world and work on charitable causes.
The departing CEO will walk away from Reckitt a very wealthy man. He took home £18.91 million ($30.76 million) in 2010 and more than £92 million in 2009, including base pay, bonuses and exercised share options. He has transferred at least £114 million of his money to a charitable trust.
Mr. Kapoor has been at the company since 1987, when he joined Reckitt & Colman in India, but is relatively unknown to the company's investors. He ran the company's operation in the U.K., Ireland and Scandinavia from 2001 to 2006. Reckitt's new finance chief, Liz Doherty, a former Unilever PLC and Tesco PLC executive, will be at the helm alongside Mr. Kapoor.
Adrian Bellamy, Reckitt's chairman, said he expected Mr. Kapoor to continue with a similar strategy as Mr. Becht's. "He certainly has not indicated to the board that he plans to do a sharp right or a sharp left turn," he said. The board didn't conduct an external search. It was deemed unnecessary, Mr. Bellamy said.
Mr. Bellamy said the board was prepared because it discusses succession twice a year at least and had identified Mr. Kapoor as a prime CEO candidate some time ago.
Mr. Kapoor faces the challenge of returning Reckitt to its stellar growth record after the economic downturn. Organic sales growth in the company's core businesses averaged 7.3% from 2000 to 2008, but slid to 5.5% in 2009 and 4.5% in 2010, according to Bernstein.
He also faces the task of integrating Durex-condom maker SSL International PLC, which Reckitt agreed to purchase last year for $3.88 billion, and Indian ointment and medicine company Paras Pharmaceuticals. Those acquisitions will continue the company's push into the lucrative over-the-counter health-care market.
Investec Securities downgraded Reckitt's stock to "sell" from "hold" on news of Mr. Becht's departure. "For us, it's hard to overstate his impact and we think Reckitt now faces an uncertain future," analyst Martin Deboo said.
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