Nestlé has announced that Paul Bulcke, chairman since 2017 and former CEO of the Swiss group, will step down at the company’s annual general meeting in April 2026. He will be succeeded by Pablo Isla, former chairman and CEO of Spanish fashion giant Inditex, owner of Zara.

The transition follows rising investor dissatisfaction over Nestlé’s share performance, post-pandemic strategy, and concerns that the company’s corporate governance model was outdated, according to several shareholders quoted by Reuters. Bulcke, 70, had faced declining support, with 84.8% backing his re-election in April 2024, down from nearly 96% in 2017.

Investors also expressed discomfort with Nestlé’s longstanding practice of promoting former CEOs to chairman roles. Both Bulcke and his predecessors—Peter Brabeck and Helmut Maucher—followed this path. Bulcke served as CEO from 2008 to 2016 and was re-elected for another year in 2024, despite calls for change.

Isla, widely credited for Inditex’s growth and global strategy execution, is expected to bring a fresh approach to Nestlé’s leadership. “Inditex is one of the best-managed companies in an ultra-competitive sector. Pablo Isla played a leading role in this. And because he already knows Nestlé, he is a good solution,” said Simon Jaeger, portfolio manager at Nestlé investor Flossbach von Storch.

Nestlé owns a 40 billion euro ($47.11 billion) stake in French beauty conglomerate L’Oréal, a key asset in its portfolio. One of Isla’s first priorities, analysts said, will be defining the profile of the group’s next CEO. Laurent Freixe, who replaced former CEO Mark Schneider in August 2024, is 63, prompting questions about succession planning.

“This timing ensures a smooth transition, providing ample time and space for the new leadership team to settle in,” Nestlé spokesperson Christoph Meier told Reuters, adding that the company had reviewed its succession plans in June.

Despite Nestlé’s statement that Bulcke chose not to seek re-election in alignment with the company’s long-term direction, analysts noted the timing was unusual—coming shortly after his re-election and nearly a year before his mandatory retirement age of 72. Bulcke was originally due to retire in 2027.

Investor frustration has been mounting in recent years. Several top-30 shareholders voiced concerns over Bulcke’s support for Schneider during periods of underperformance, including a 42% drop in share price between 2022 and 2024. By contrast, rivals Unilever and Danone gained 15% and 19%, respectively, over the same period.

Additional pressure came from regulatory controversies, including Nestlé’s use of banned purification methods for bottled water in France and supply chain issues in the U.S. Investors said the unexpected departure of Schneider—who had continued investor roadshows shortly before his exit—only heightened concerns.

Beyond governance, Nestlé’s high debt level has drawn scrutiny. Net debt stood at 2.9 times adjusted EBITDA at the end of 2024, up from 2.5 times a year earlier, raising questions about the group’s future dividend capacity.

“Shareholders only want one thing: returns. And if they’re not there, then people are unhappy,” one investor commented.

With Isla’s appointment, investors hope for stronger execution and a refreshed leadership style. “We need better execution at Nestlé,” said Jaeger. “That’s why it’s good to have a breath of fresh air in the position of chairman.”

FashionNetwork.com with Reuters