Finished

Reckitt Benckiser: Dismay greeted news that Bart Becht is stepping down as chief executive of consumer goods group Reckitt Benckiser. The unexpected decision crystalises market fears about Reckitt’s ability to extend its impressive growth record.

Becht’s tenure has been a bright light in a decade that, as far as European consumer goods companies are concerned, is dull. He won notoriety for his pay - which reached £90 million for 2009 alone. But since the rewards came in the context of a quite remarkable corporate turnaround story, that was unfair. Shareholders in the old Reckitt & Colman business, which was merged with his Benckiser in 2000, have particular reason to be thankful. Becht not only saved it from oblivion; he generated massive shareholder value in the merged operation which he ran. The FTSE 100 has more or less trod water over the last 10 years, while the Reckitt Benckiser stock is up more than fivefold. Total shareholder return is some 700 per cent. Becht turned Reckitt round and built on the more stable platform that was Benckiser, with unremitting focus. His highly remunerative salary incentives no doubt helped concentrate his mind. Becht instilled a culture of cost savings that led to years of operating margin improvement. He protected and enhanced pricing in the face of supreme aggression from supermarkets.

Recently, however, doubts have begun to emerge. Efficiency gains became progressively more difficult to extract. Swapping red balls with silver balls in thumb-sized Finish dishwasher tablets looked more like sleights of marketing hand than genuine R&D-led innovation. Acquisitions followed in healthcare. The jury is out on whether Reckitt can create value from these deals given the prices paid and the different skills needed to develop more medical products. Some investors will wonder whether 54-year-old Becht is getting out while his wonder-boy reputation is safe. But Reckitt’s enterprise value to forward Ebitda premium to Procter & Gamble and the European consumer staples peer group has already been eroded. Becht’s replacement, Rakesh Kapoor, has been with the business 25 years. But he has a devilishly hard act to follow.