Sometimes, even when an executive does a good job, it could be a corporate board’s responsibility to determine that their performance might not be good enough. Such was the case at Unilever, whose board decided to oust its current CEO Hein Schumacher after less than two years on the job and replace him with its CFO and executive director Fernando Fernandez. The move seemed to catch almost everyone by surprise.
Unilever, the parent company of over 400 brands including Dove soap, Ben & Jerry’s ice cream and Hellman’s mayonnaise, is in the middle of executing a turnaround strategy that Schumacher devised to address the company’s years of underperformance prior to his appointment in July of 2023. While the early results were promising—Unilever shares have gained more than 9 percent since Schumacher became CEO—apparently the board has higher expectations for the company’s growth and is demanding a faster pace.
In a statement, Unilever Chairman Ian Meakins said, “On behalf of the Board, I would like to thank Hein for resetting Unilever’s strategy, for the focus and discipline he has brought to the company and for the solid financial progress delivered during 2024… The Growth Action Plan (GAP) has put Unilever on a path to higher performance and the Board is committed to accelerating its execution.
“While the Board is pleased with Unilever’s performance in 2024, there is much further to go to deliver best-in-class results. Having worked with Fernando closely over the last 14 months, the Board is very confident in his ability to lead a high performing management team, realize the benefits of the GAP [Growth Action Plan] with urgency, and deliver the shareholder value that the company’s potential demands.”
According to news reports, Schumacher, who was an external hire, is stepping down as CEO and board member on March 1, 2025, by mutual agreement. Fernandez, who has worked at Unilever for nearly 40 years including holding positions as President Latin America, CEO Brazil and CEO Philippines, as well as Unilever CFO, took on additional responsibilities within the last 14 months, which apparently impressed the board enough to make the switch.
The Unilever board’s decision to remove a highly regarded CEO who has produced positive growth performance in less than two years highlights the pressure directors are under to select CEOs that can produce performance that outperforms competitors in record time. Good performance may not be good enough in an environment where a company’s largest shareholders may include multiple activist investors. With that in mind, board members might want to consider the following questions:
Would your board be able to make a decisive call like Unilever’s board did? The act of removing a CEO is tough enough without having to justify removing a CEO who has been relatively successful in their first two years. However, removing this CEO seems to have been based on the perception that more urgency could have been applied to turnaround efforts.
What Unilever’s decision might indicate is that standards for company growth are changing, and what used to be acceptable may not be acceptable going forward. For a global company, making changes in many different jurisdictions can be challenging, so Unilever’s board didn’t hesitate to shift to a leader who demonstrated an ability to make change happen at a faster rate. This dynamic may be true for all companies going forward.
When speaking about Fernandez in a company statement, Unilever Chairman Meakins emphasized that, “The Board has been impressed with Fernando’s decisive and results-oriented approach and his ability to drive change at speed… He has a strong track record of performance and portfolio management, a love of brands and a profound knowledge of Unilever’s operations.” The board made a decisive decision to drive change at a faster rate.
Can your board’s succession planning process put your company in a position to upgrade your CEO if necessary? Unilever’s board was in a great position to make a CEO shift because it had an internal candidate with solid experience at the company who was given additional responsibilities that allowed him to prove he possessed the skills needed to improve company growth at a pace the board preferred. Boards might want to consider whether they have an effective internal system to develop CEO candidates who have the skills to lead the company into the future. A system to identify external candidates who possess those same leadership qualities also needs to be put in place. Having this type of succession planning process in place will allow the board to make a decisive decision to change CEOs if circumstances dictate.
Is your board clear on the standards of performance of your CEO? The expectations of CEO performance vary greatly, so it is important that the board is on the same page regarding what levels of company oversight and financial growth chief executives need to achieve to be considered successful. It might be a good time to reexamine what level of productivity the board expects from its current CEO and whether that standard is appropriate given company resources, the current economic environment and the expectations of company stakeholders and investors. Re-establishing standards of performance with the CEO and management team can clarify company goals, make clear what executives will be held accountable for (and rewarded for) and provide insight into how receptive the management team is to the board’s oversight responsibilities.
