Nestlé, the world’s largest food and beverage company, may be facing renewed activist scrutiny as cracks emerge in both its financial performance and corporate governance structure. These cracks have been amplified by two sudden CEO changes within just one year and the unexpected early departure of its Chairman, underscoring instability at the top of the organization. Together with weaker financial performances and governance concerns, this raises the question: could Nestlé be targetable by activist investors again?

Weak Total Shareholders Returns

Over the past years, Nestlé’s Total Shareholders Returns have significantly underperformed compared to peers such as Danone, Unilever, or PepsiCo. While rivals have delivered double-digit growth, Nestlé reported –14.4% over one year, –27.6% over three years, and –21.7% over five years (Table 1).

Table 1

Despite this underperformance, Nestlé’s Return on Assets (Table 1) remains strong, averaging close to 10% and broadly in line with or above peers—suggesting the core business is operationally sound. However, valuation metrics such as Price-to-Book, 6.62 down from a five-year average of 6.68, highlight a stagnating or declining market perception (Table 1).

Questionable Capital Allocation

Since 2017, Nestlé has spent ~CHF 53 billion on buybacks. The outcome is clear: no durable value creation especially in terms of Total Shareholders Returns, and a doubled debt load (from ~CHF 30 billion to ~CHF 60 billion). This looks less like disciplined capital return and more like an admission of strategic drift. Cash was burned to mask weak performances rather than to build the next decade of Nestlé.

The Board chose to shrink equity instead of funding category innovation, scaling winning platforms, making transformative portfolio moves, or stepping up capex where returns justify it. In short, the buybacks signal a shortage of bold ideas from the Board about how to shape Nestlé’s future.

Meanwhile, the sizeable L’Oréal stake remains largely passive capital that could be monetized to restore strategic flexibility.

Governance Red Flags

Governance concerns may prove the more compelling angle for activist attention. Currently, only 4 of 14 board members bring FMCG experience, with recent additions—Luca Maestri (Apple) and Geraldine Matchett (DSM/Firmenich)—lacking direct exposure to Nestlé’s core B2C categories. At the end, aside from Chairman Paul Bulcke who just left, no directors have long-standing ties to the company’s categories.

Other issues include:

• Board relevant seniority gaps beyond two directors (Isla and Boer).
• Long lasting conflict of interest links to Credit Suisse.
• Executive instability, with three CEOs in just 13 months.

All these factors raise questions of agency issues and strategic alignment at the Board level between Directors and Shareholders.

Why Activists Could Move In

The combination of poor shareholder returns, aggressive but arguably ineffective buybacks, elevated debt levels, and governance weaknesses create fertile ground for activist campaigns. Importantly, these very parameters were already flagged during Third Point’s activist campaign in June 2017. At the time, the fund launched the NestléNow plan, crafted alongside Jan Bennink, urging the company to become “sharper, bolder and faster.”

Nearly eight years later, much of that blueprint remains highly relevant. The persistence of unresolved governance issues, lack of bold portfolio moves, and disappointing shareholder returns suggest that Nestlé has yet to fully deliver on the transformation Third Point once demanded.

Bottom line: Nestlé’s fundamentals remain solid, but its governance shortcomings, weak shareholder returns, and questionable capital allocation echo the same concerns raised by Third Point’s NestléNow plan back in 2017. With many of those recommendations still highly relevant—calling for the company to become “sharper, bolder and faster”—Nestlé may once again be a prime candidate for stronger activist pressure. For investors, the real question is not if activists will return, but how soon.