Reuters
LONDON
Growing up in Germany, Mark Schneider was pushed to become fluent in English by his father, who believed it would give him an edge.
Now as Nestle's relatively new chief executive, the 52-year-old's abilities are being put to the test by an activist U.S. investor pressing him to act faster and more forcefully to raise the Swiss company's profit.
Billionaire hedge fund manager Daniel Loeb's Third Point is urging steps it says can boost margins and double earnings per share at the world's biggest food company by 2022.
Years spent in the United States landed Schneider dual German-U.S. citizenship and a Harvard MBA. Combined with a PhD from the Swiss university of St. Gallen and 13 years as CEO of a German firm, he has the experience to balance the measured European shareholder approach and American-style activism, analysts say.
"Schneider can hopefully bring both of those things to his role," Kepler Cheuvreux analyst Jon Cox said, adding that if he fails to deliver on his strategy, the maker of Gerber baby food and Nescafe could face calls for a break-up.
Third Point sent a letter to the board and published a 34-page presentation on recommendations for Nestle this week but has not given a deadline for the changes, which include selling its L'Oreal stake and reorganizing into three business units.
Sources familiar with the matter say the fund had several interactions with Nestle in the past year since becoming a top 10 shareholder. The next meeting, set for autumn, had already been scheduled prior to this week's action, one source said.
As the first outsider to become Nestle CEO in almost a century, Schneider has impressed investors with his candid assessment of the company's problems and lightened the mood at its Lake Geneva headquarters, often seen wearing open-necked shirts and eating in the staff cafeteria.
Schneider's track record is strong. At the helm of German healthcare company Fresenius, he oversaw merger and acquisition (M&A) deals that brought a twelvefold increase in net income.
But industry-wide troubles like changing consumer habits, economic uncertainty and upstart rivals have taken their toll on Nestle, and analysts say its spotty M&A record, sprawling structure and occasional arrogance have not helped.
Some people think the external pressure from Third Point, which owns about 1 percent of Nestle's shares, may actually help Schneider as he tries to shake up the Swiss company's corporate culture, as well as improve sales and earnings growth.
"Every investor in Nestle wants them to get the margins up a bit faster," said Ali Miremadi, a fund manager at GAM Investment Management, which owns nearly $73 million of Nestle shares, Reuters data shows.
"That's also what the chief executive and the board want."
Schneider has begun with frequent, incremental changes, while avoiding a big bang such as selling Nestle's 23 percent stake in L'Oreal, which Third Point and others advocate.