German consumer products giant Henkel AG announced its CFO, Carsten Knobel, would succeed CEO Hans van Bylen when he steps down on January 1.
The move has been panned as too conservative by analysts who say a bolder choice is needed. "He is not an external, experienced hire that Henkel now requires to solve its fundamental strategic, operating and cultural problems," analysts at Sanford C. Bernstein & Co. wrote in a letter.
Henkel, a Germany-based multinational that owns the makers of Dial soap and Right Guard deodorant, among other familiar products, has been struggling in recent years. Its net income declined 7.3% in the second quarter.
Knobel is the third internal hire to CEO at the company. He's been at Henkel for nearly 25 years and has been on the company's management board since 2012, where he was responsible for finance and business solutions, the company said.
Simone Bagel-Trah, chairwoman of the board and shareholders’ committee, praised Knobel as "an excellent successor from within the company. He knows Henkel very well and has many years of international management, leadership experience, and [he has] an excellent reputation in the capital markets.”
This long tenure is part of the problem, critics say. He “is part of the same management board that failed to deliver on operational execution,” analysts at JP Morgan Chase & Co. said, according to the Wall Street Journal.
The move runs counter to a recent trend of companies looking outside for executive talent, whether for CFO or CEO.
A survey by executive placement firm Crist|Kolder found that almost 44% of CFOs at Fortune 500 and S&P 500 companies were outside hires this year. That's up from less than 34% over the previous 10 years.
Despite the idea that a CFO-to-CEO promotion may be intended to “convey an aura of stability and confidence, such promotions run the risk of underwhelming the market,” WSJ said. “Outside observers could interpret [Knobel’s promotion] as a sign that [Henkel] is anticipating an economic slowdown and wants a person familiar with the financials at the helm.”