Diageo investors await leadership clarity as CEO question looms

Sir John Manzoni faces mounting pressure ahead of Diageo’s annual meeting as shareholders demand answers over the company’s vacant chief executive position. Interim boss Nik Jhangiani’s future, and the company’s leadership strategy, are expected to dominate proceedings.

Unless Manzoni makes an announcement in the next 72 hours, shareholders will want to know who will be leading the company as chief executive and why no news on an appointment has been forthcoming since Debra Crew left by mutual consent in July.

The relatively raw finance director, Nik Jhangiani, who only joined the company just over a year ago, was moved into the top slot as interim CEO. Since then, he has pursued a policy of saving $625 million over three years through advertising and promotion efficiencies, reduced overheads and supply chain improvements.

Alongside that, Jhangiani has hinted at selling off underperforming or non-core assets. Speculation has swirled around East African Breweries, the Royal Challengers Bangalore Indian Premier League cricket franchise and even Captain Morgan rum.

But to date, there have been no meaningful sales to boost the balance sheet, while arch rival Pernod Ricard has successfully unloaded its underperforming wine division to Vinarchy.

Manzoni’s role under scrutiny

A former mandarin in the Cabinet Office, Manzoni has been a non-executive director of Diageo for the past five years and will undoubtedly have had a say when Jhangiani was headhunted from Coca-Cola Europacific Partners.

As chairman since February, he will have been key in Jhangiani’s (so far temporary) elevation into the driving seat following Crew’s exit.

Succession tensions and speculation

It is widely speculated that Crew and Jhangiani failed to hit it off as a top duo and that the Rutgers Business School alumnus has lobbied hard for his role to be made permanent.

The likelihood of him getting it was reinforced when, in August, Diageo asked Dierdre Malhan to come out of retirement and temporarily return to the seat Jhangiani was hired to fill only a year ago.

The perception was that Malhan was keeping the seat warm until Jhangiani’s top role was confirmed and his successor as CFO was announced.

Doubts over experience and next steps

Jhangiani makes all the right noises in public and is full of business-school terminology, but some commentators have pointed out that he has never run a business, let alone one as large as Diageo, which is still valued at £40 billion.

As one put it recently: “There’s a world of difference between bottling stuff for Coke and building brands, the key to Diageo’s success.”

Eyes on Manzoni’s next move

Is Manzoni hesitating? He may be poised for a “big unveil” on Thursday, slotting in a new CFO as well as promoting Jhangiani to the top job on a permanent basis. A positive trading statement will also help.

Shareholders will be all ears for what he has to say.

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