James Ashton: Swiss new rules set to stop Nestlé from getting on with it

My Week

Blue-chip companies rarely talk in public about their 10-year plans, probably because they fear that investors will worry they have lost focus on hitting the next quarterly earnings target. AstraZeneca only paraded its 2024 vision so prominently this week because the drug maker is under siege from Pfizer.

One firm that is a hymn to long-termism is Nestlé, which still follows old-school succession planning the likes of which HSBC favoured in this country until the bank's board decided Michael Geoghegan's face didn't fit.

On a flying visit to London, Nestlé chairman Peter Brabeck-Letmathe, who will retire in 2017 after an unparalleled 49-year career at the KitKat-to-Nescafé giant, talked about developing the business over decades, not narrow reporting periods. Galderma, the skincare venture it is in the process of taking control of from partner L'Oréal, already has a 30-year heritage. Nespresso might feel like a newish brand that gave birth to a whole new grocery category, but Nestlé boffins have worked 25 years to get it this far.

What frustrates Mr Brabeck-Letmathe are Switzerland's new corporate governance rules – not unlike changes already imposed here – that he says breed short-termism. Putting every member of the board up for election every year creates a climate of looking over one's shoulder and a perfect opportunity for the type of activists making hay on Wall Street to get a toehold in his company.

Then comes the pressure to borrow up to the gills in order for shareholders to siphon off cash that might be usefully spent on finding the Next Big Thing. Perhaps less convincingly, he laments that investors who turn up to the annual meeting spend the morning waving voting slips for resolution after resolution, instead of learning anything useful about company strategy.

But his main point stands: it is a fine line between improving accountability and preventing executives from getting on with running a business.