BOSTON (Reuters) – Billionaire investor Daniel Loeb on Sunday stepped up pressure on food group Nestle SA (NESN.S), in a letter that urged its board to be “sharper,” “bolder” and “faster” in spinning off businesses and untangling its complex management structure.
“This is a call for urgency – rather than incrementalism,” said Loeb’s letter. It came with a 34-page presentation with recommendations and critiques. Third Point, the $18 billion hedge fund which has invested more than $3 billion in Nestle, also launched website Nestle SA76.6
It criticized Nestle’s slow sales growth, declining stock price and its failure to sell off more pieces that do not fit its “nutrition health and wellness” strategy.
The fund manager’s biggest concern was corporate structure, with the board of directors in charge of strategic direction.
“Nestle’s insular, complacent, and bureaucratic organization is overly complex, lethargic, and misses too many trends,” Loeb said in the letter.
In early 2017, the Swiss company hired Schneider, a German, as its first non-Swiss CEO in nearly a century. He had won praise for overhauling Fresenius Medical Care (FMEG.DE).
But former CEO Paul Bulcke remained Nestle’s board chair, which raised eyebrows among governance experts. Insiders say that after months at the helm, Schneider has yet to bring in a broad team of his own.
Industry experts say CEOs sometimes privately welcome public critiques from big shareholders, as effective cover to push through changes more aggressively. Loeb has only put together websites twice before – at Yahoo and Dow Chemical, but he has been vocal at plenty of companies and most recently pushed for United Technologies to break itself into three companies.
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