Move fast or be dismissed

One scoop to start: Blackstone and Omers have each put multibillion-dollar healthcare services companies up for sale, as private equity groups seek to offload their investments in a push to return cash to investors, said people familiar with the matter.

In today’s newsletter:

• Unilever chief gets dismissed

• D1 Capital’s big bets in Europe

• Executive pay in London soars

A big shake-up at Unilever

The consumer goods groups of the world used to be M&A machines. Today, they’re in retreat.

The latest example is Unilever, the London-listed company behind everything from Dove soap to Ben & Jerry’s ice cream.

Unilever’s in the midst of a broad turnaround meant to bolster the group by slashing costs and shedding underperforming businesses including breaking off its massive ice cream unit. Yet the pace of change has apparently been too slow.

On Tuesday, Unilever’s chief executive Hein Schumacher was dismissed in a surprise move after less than two years in the job. People familiar with the matter told the FT the board of directors had lost patience with his speed in restructuring the group.

The board decided to remove Schumacher during a meeting on Monday. He’ll be replaced by chief financial officer Fernando Fernandez, who’s seen as “a guy of pace and speed”, said one person familiar with the board’s thinking.

Fernandez’s experience running Unilever’s beauty business and emerging markets were also viewed as key feathers in his cap.

The bold change is a further sign of the growing pressure Unilever faces from investors, including US activist Nelson Peltz, to improve its performance.

Earlier this month Unilever announced that its ice cream business would have a primary listing in Amsterdam when it’s split off later this year. People familiar with the matter said that decision was one of the factors behind Schumacher’s loss of support as Peltz had been advocating for a listing in the US.

But Unilever is not the only consumer group shifting leadership or strategy. Nestlé announced in August that chief executive Mark Schneider was stepping down, while Pret A Manger and Krispy Kreme backer JAB Holding also tapped new leadership to pivot towards insurance.

And Unilever’s also in good company when it comes to CEOs feeling the heat from activist investors. BP boss Murray Auchincloss has been battling to convince Elliott Management in recent weeks that he can turn around the energy major.

It’s all a symptom of the difficult environment for consumer spending in recent years, and investors’ shifting attitudes away from conglomerates towards more simple businesses.

DD’s takeaway question: If the pace of change was too slow, could there be bigger moves ahead at Unilever?

US hedge fund makes money in an unlikely place

Pensioners, investors and executives in Europe all had a common gripe last year: the region was sorely underperforming the US financially. American exceptionalism was on a tear, and those in Europe felt like they were slipping behind.

Yet one US hedge fund had a different view of the cheaply priced European companies: they were a prime opportunity to potentially make a windfall by snapping up discounted shares.

New York-based hedge fund D1 Capital Partners made a 44 per cent return last year on its publicly traded investments largely because of a few big bets on European companies’ turnarounds, according to an investor letter seen by DD’s Amelia Pollard.

The fund manages about $21bn and was founded in 2018 by Tiger Management grandcub Daniel Sundheim, who spent a long stretch at Viking Global Investors before starting his own firm.

The hedge fund made big gains from its investments in Siemens Energy, Rolls-Royce and UniCredit, three corporate groups at inflection points. New leadership at Rolls-Royce is paring costs, while Andrea Orcel at UniCredit is scouring the market for possible takeovers.

Ironically, betting on corporate turnarounds has helped D1 Capital undergo its own.

The hedge fund suffered big losses in 2022 from bets on private tech companies that soured. But the firm began to turn things around in 2023, when it made 19 per cent from its investments in public companies, said a person familiar with the figures.

The hedge fund is now past its so-called high-water mark for the “overwhelming majority” of its investors — meaning it can again collect the all-important performance fees it had to forgo until clients were made whole.

Plenty of other hedge funds have been popping champagne corks at the start of this year, our friend Robin Wigglesworth wrote for Alphaville. Hedge fund managers are again on a roll, and are shorting again.

London-listed companies dole out big paydays

Executive salary raises that climbed into the multimillion-dollar territory were once a strictly American phenomenon. Not any more.

Some of the biggest London-listed companies have agreed or are considering major increases in pay for their top executives, caving to the pressures of a transatlantic split over the issue.

For UK investors this topic was such a hot potato the answer was often a blanket no.

Now they’re showing more flexibility on a case-by-case basis, especially at companies that have large US divisions, those that are looking to hire Americans or those that could lose their top talent to US companies.

In return, corporations need to show the evidence — data comparisons with peers, historic pay analysis and other disclosures.

Those conversations used to happen quietly behind closed doors, but companies now make the case publicly to attract and retain the best talent.

The London Stock Exchange Group and Smith & Nephew blazed the trail last year by successfully securing shareholder support for multimillion-pound pay rises for their top executives, with deals to pay them as much as £13.1mn and $11.8mn, respectively.

Now several other companies are thinking about following their lead. British American Tobacco and Compass Group are among those proposing cushy pay deals for their top brass this year.

It’s not strictly the C-suite that’s making more money as a result of the battle for talent. Some managers are making nearly as much, if not more, than their executive-level bosses, in part because companies don’t need to disclose their pay.

But even with the most recent pay bumps, London’s CEOs still trail their American counterparts. The median FTSE 100 chief makes £4.2mn, according to the High Pay Centre think-tank.

That’s a big bonus away from the roughly $16mn that S&P 500 CEOs make.

Job moves

• Rothschild & Co has hired Andrew Grant to work for its global advisory business in London, although the firm did not specify his new job title. Grant previously founded Tulchan Communications, a communications advisory firm that was later bought by Teneo.

• Lucid Motors chief executive Peter Rawlinson has resigned. The company’s chief operating officer Marc Winterhoff will step into the job on an interim basis as the company looks for a permanent replacement.

• NHS England chief executive Amanda Pritchard resigned on Tuesday as the government signalled its intent to tighten Whitehall control over the struggling health service.

• The venture capital firm Norwest has promoted Irem Rami, Scott Mitchell and Chris Scullin to partners. Rami works on the healthcare team, Mitchell focuses on retail and Scullin specialises in tech.

• Simpson Thacher has hired Amy Candido as head of the firm’s intellectual property litigation practice in Palo Alto. She previously worked at Wilson Sonsini.

Smart Reads

Land barons As China’s government struggles to ease a real estate crisis, state-owned developers have been buying up land, propping up the country’s housing market, an FT visual investigation shows.

Staying mum In Silicon Valley, tech employees have done little to protest against the rightward shift of their bosses such as Meta’s chief executive Mark Zuckerberg, the FT writes.

Tiny tenures British chief executives may not command the pay cheques of football managers, Lex writes. But Unilever’s precipitous ousting of Hein Schumacher shows they can have equally short shelf lives.

News round-up

Smith & Nephew chief rejects shareholder calls for break-up (FT)

Tesla buys assets from insolvent German engineering group (FT)

UAE investor buys stake in Mali gold mines from Canada’s Allied Gold (FT)

Joachim Nagel calls for reforms as Bundesbank suffers €19bn loss (FT)

Chegg sues Google over claims AI search tool blocks user traffic (FT)