Dutch health technology company Philips unexpectedly announced the imminent departure of CEO Frans van Houten on Tuesday, amid a massive product recall that has halved its market value over the past year.
Philips said Van Houten would be replaced on October 15 by Roy Jacobs, the head of the company’s connected care businesses, even though his third term as CEO was not scheduled to end until April.
“The supervisory board and current Philips CEO Frans van Houten have agreed that with the end of his third term, the time is right for a change in leadership,” Philips said in a statement.
“I am pleased with the result”, van Houten told reporters. “Of course it is always difficult to let go, but it is a logical moment to hand over after 12 years. It is great to be able to hand over an internal heir with the confidence that he will build on the foundation that I have laid . “
A special shareholder meeting will be held on 30 September to appoint Jacobs, who joined the company in 2010, as CEO.
Shares of Philips were up 2.2 percent in early Amsterdam trading but are still down more than 50 percent as it surprised investors by recalling 5.5 million ventilators used to treat sleep apnea in June 2021.
The company said at the time that the foam used to reduce sound can degrade and emit tiny particles irritating the airways, while the gases released by the offending foam could also be toxic or raise cancer risks. can.
Although the blow to Philips’ reputation could have prompted an outsider to be selected for the top position, the chairman of the supervisory board, Faik Sijbasma, said Jacobs was the right person to fix the company’s problems.
“He has extensive international experience and has enhanced the growth profile of the businesses he runs,” Sijbesma said.
“He led the post-recall production boom and knows a lot about patient safety and product quality, so he’s the right person from this point of view as well. He can hit the ground running.”
During his nearly 12 years, 62-year-old Van Houten transformed the once sprawling conglomerate into a focused health specialist, spun off its lighting and consumer electronics divisions.
Philips now focuses on medical imaging, monitoring and diagnostic equipment and competes against General Electric and Siemens Healthcare.
© Thomson Reuters 2022