Unilever CEO Paul Polman steps down after headquarters move fiasco, replaced by insider Alan Jope

A UK investor revolt forced Polman and the Unilever board to scrap a plan in October to move the headquarters of the dual-listed company to the Netherlands

FP Staff November 30, 2018 13:40:08 IST
Unilever CEO Paul Polman steps down after headquarters move fiasco, replaced by insider Alan Jope

Unilever’s Chief Executive Paul Polman will step down next month after 10 years in the job, leaving insider Alan Jope to step into his shoes after the Anglo-Dutch group’s failed attempt to shift its headquarters.

A UK investor revolt forced Polman and the Unilever board to scrap a plan in October to move the headquarters of the dual-listed company, which makes Dove soap and Ben & Jerry’s ice cream, to the Netherlands.

Company veteran Jope, 54, is the boss of the beauty and personal care division which is Unilever’s largest, accounting for almost half of group annual profits. The Scotsman also previously led the company’s business in China and has long been seen as a possible successor to Polman.

“Our global footprint includes strong positions in many important markets for the future and our focus will remain on serving our consumers, and our other multiple stakeholders, to deliver long‐term growth and value creation,” Jope said.

Unilever CEO Paul Polman steps down after headquarters move fiasco replaced by insider Alan Jope

A file photo of Paul Polman. Reuters

At the helm since January 2009, Polman, 62, generated big returns for shareholders totalling 290 percent over the period, expanded its presence in emerging markets, and in 2017 fended off a $143 billion takeover approach by Kraft-Heinz.

That failed bid, however, helped prompt Dutchman Polman to seek to simplify Unilever’s structure by shifting its headquarters to Rotterdam. That angered UK-based shareholders as Unilever would have left the UK FTSE 100 share index, forcing some to sell.

Unilever had faced mounting opposition from key shareholders, including Aviva Investors, Royal London, Columbia Threadneedle, Legal & General Investment Management, Lindsell Train, M&G Investments and Brewin Dolphin. The group had originally unveiled the planned switch in March in a symbolic decision that was largely interpreted by analysts as a blow to post-Brexit Britain.

Polman, 62, tweeted that he had decided to "step down from my role as CEO", adding: "It's been a great honour to lead this team for the past 10 years and together build a sustainable business that has made a difference to millions of lives."

"I have no doubts that I will be leaving the company in excellent hands. Under Alan's leadership Unilever is well-placed to prosper long into the future."

Unilever’s board, led by Chairman Marijn Dekkers, ditched the HQ move plan on 5 October after it became clear that it could fall short of the investor approval needed.

Dekkers denied the row had accelerated Polman’s retirement.

“The appointment of Alan Jope as the successor of Paul has nothing to do with the simplification process,” he told reporters on Thursday.

Polman’s decision to retire was not unexpected and the board had started a process a year ago to consider appropriate replacements, Dekkers added.

“That’s why we were able to appoint Alan immediately,” he said.

Marmite 

Polman’s reputation as a champion of issues like sustainability and the company’s social impact wasn’t always appreciated. Bernstein analyst Andrew Wood said some investors were irked by what they considered a “preachy” style but added that Polman had a strong record over the past decade.

“Just like one of Unilever’s highest-profile products, Marmite, Polman engenders strongly differing opinions from investors,” Wood said.

“We consider that Polman has been an exceptionally good CEO of Unilever,” Wood added.

Dekkers said that Jope’s appointment “stands for continuity”, reassuring investors that the company was on track to meet guidelines set by Polman, that includes a target for an underlying operating margin of 20 percent by 2020.

Unilever investor Skagen Global Fund said it hoped that Jope would build on Polman’s legacy.

“Jope is an impressive executive and we congratulate the board on an excellent choice of successor,” Skagen Global fund portfolio manager Knut Gezelius said.

“Choosing Jope over presumably a long list of strong external candidates is another testament to the strength of the internal bench and management quality at Unilever.”

National balance 

The appointment of Jope rebalances the Anglo-Dutch leadership of the company in favour of the British-side. While Dekkers is Dutch, Unilever’s Chief Financial Officer Graeme Pitkethly is also British.

Dekkers said that nationality played no role in how Unilever made appointment decisions.

Pitkethly, who was involved in the media campaign defending the plan to move the HQ, had also been rumoured as a possible replacement for Polman.

Jope joined Unilever as a graduate trainee in 1985. He will be paid a fixed salary of 1.45 million euros ($1.65 million) plus a target annual bonus of 150 percent of fixed pay in his new role as CEO.

Investors will not have to wait long for a chance to quiz the company on its future - Unilever is due to hold an investor day in Mumbai, India on 4 and 5 December.

On the new CEO’s agenda will be Unilever’s bid for GlaxoSmithKline’s Indian Horlicks nutrition business, where it is competing against consumer giant Nestle, as well as handling any fallout from a possible no-deal Brexit as Britain is due to leave the EU in March 2019.

Polman, who was paid a fixed annual salary of 1.4 million pounds but with bonuses took home a total package of about 10 million pounds, will stay on for six months to support Jope’s transition into the role, Unilever added in its statement.

Shares in Unilever traded 0.2 percent higher in midafternoon. The stock has risen 170 percent since Polman took the top job, outperforming Britain’s bluechip index which is up about 75 percent.

With inputs from agencies

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