Diageo boss Paul Walsh to step down

He will make way for company veteran Ivan Menezes, who has been chief operating officer of the drinks group since March last year.

Walsh, 57, will step down from the board at the annual meeting in September and will stay on until June next year to help ease the transition, drawing a full executive salary.

Last year Walsh received a £1.2m salary as part of a total pay package worth £11.2m. The Diageo chairman, Lord Davies, said that his remuneration was “appropriate” given the strong performance of the business.

Walsh has complained about anti-business sentiment in the UK, claiming that top executives are “constantly bludgeoned” for their high pay.

He has also cashed in shares worth £12.7m since last September, though he retains a substantial personal holding in the drinks group of 770,000 shares worth £15.4m.

A Diageo spokeswoman said Walsh had not yet decided what his next move would be. He holds a number of corporate non-executive roles, as well as working as an ambassador for the government’s business department.

A keen hunter, Walsh reportedly mounts antelope heads from his 2,400-acre big game estate in South Africa on his study walls. He hit the headlines for the wrong reasons in 2006, during a bitter split with his ex-wife Nikki over his £30m fortune.

Analysts were expecting the news of his departure, which the company had flagged up well in advance, and the shares inched down by just 0.2%.

Walsh’s successor Menezes originally hails from India, and headed up Diageo’s key North America division for eight years before his appointment as chief operating officer last year.

Martin Deboo, analyst at Investec, said: “For us, Menezes’s immediate priority will be to deliver on Diageo’s organic growth agenda, which has looked a bit less sprightly recently. Beyond that, we think he needs to think about how best to evolve the strategy and portfolio, around which we continue to question the valuation creation from the integration of spirits and brewing.”

Walsh, who was appointed chief executive in September 2000, has presided over an impressive period of growth at Diageo. Deboo said that £100 invested in Diageo on his appointment would have increased to £538.

Soon after Walsh took charge in 2000 the company took over the Canadian distiller Seagrams in a £5.5bn joint bid with Pernod Ricard of France. Almost 10 years ago he refocused the group by selling off its food interests, including baking group Pillsbury and a holding in Burger King. More recently, he has been buying up brands in emerging markets, where Diageo aims to make around half of its turnover by 2015, to counter sluggish demand in recession-hit European economies. Among others, the company has bought Turkey’s Mey Içki and India’s United Spirits.

It is thought part of the reason Walsh needs to stay on for a year is to manage the integration of the latter acquisition. James Isenwater, analyst at Deutsche Bank, said: “You don’t know how key Walsh is to some of those relationships. If that means staying on a bit longer that’s fine and it’s in shareholders’ interests.”



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