Paul Polman spent 10 years as the chief executive of Unilever, one of the world’s most successful consumer goods companies. He oversaw excellent returns for shareholders, running at twice the pace of the FTSE 100 index. He defeated Kraft Heinz’s takeover attempt by launching a brilliant counterattack against a previously feared corporate raider. And yet, at the moment of his retirement, Unilever’s dreadful plan to move to the Netherlands, abandoned eight weeks ago in humiliating fashion, remains fresh in the memory.
That, though, is largely Polman’s own fault. When UK shareholders started to ask awkward questions about the Rotterdam re-domicile, he was nowhere to be seen. Polman should have pulled the rug on the misadventure long before the saga became embarrassing. He left the impression that he was a Dutch boss desperately seeking safe sanctuary for Unilever in the Netherlands as his final act. It was a bad note on which to end, which perhaps explains why he avoided questions again on Thursday.
It was left to the firm’s chair, Marijn Dekkers, to insist that the change of leadership is “absolutely not” connected to the “simplification” debacle. Well, yes, Polman had signalled that he’d be off sometime in 2019. But it was also surely sensible for him to stand aside on 1 January since the job of repairing relations with UK shareholders can’t start too soon. The task falls to Alan Jope, 54, head of Unilever’s largest division, the Dove-to-TreSemmé personal care unit. He was the continuity candidate and an obvious pick. It’s also handy that he’s a Brit.
If one ignores the botched bid for Rotterdam, Polman had a terrific innings and does indeed leave “a more agile and resilient” company, as Dekkers said. Unilever has been transformed from the one-paced bureaucracy of old. There is just one quibble: it should not have required a close encounter with Kraft for Polman to discover that Unilever could cut costs faster, increase its profit margins earlier and accelerate dividends. The rabbit-out-of-the-hat act rather confirmed the charge of lingering complacency. “We think we should already have seen the rabbits or at least been told about their existence,” remarked the fund manager Terry Smith waspishly at the time. Fair comment.
Yet, 21 months on from the “near-death experience”, as Polman described the Kraft fight, there have been two victories. The first was corporate survival, obviously. The second is a triumph for Unilever’s approach to business. “Sustainable living” is not only a better way for companies to behave, Polman always argued, but it produces reliable financial returns that compound over time. That claim has been demonstrated in spades by the progress of the two companies’ share prices since the drama. Kraft, the arch costcutter, has tanked by 40%; Unilever, shouting the virtues of steady investment, is up by almost 30%.
The sustainable living approach will yield a (more than) sustainable retirement for Polman. By the time he goes, he will have earned about €80m during his decade in charge. But nobody will want Unilever to change the long-termist strategy that Polman pursued. That’s a better legacy than the Rotterdam fiasco.
Not so Intu UK
Do they have internet access in Canada? One assumes not because it seems to have come as a surprise to the Toronto-based property giant Brookfield that we’ve got this thing called Brexit happening in the UK.
Brookfield was meant to have bankrolled a £2.9bn consortium bid for Intu, landlord of the Trafford Centre in Manchester and Metrocentre in Gateshead, but now the deal has been dropped because of “uncertainty around current macroeconomic conditions and the potential near-term volatility across markets,” by which they mean Brexit.
Hold on, though, Brexit-related risks weren’t impossible to foresee when Brookfield – in partnership with Peel Holdings, which already owns 29% of Intu, and the Saudi group Olayan – made its takeover approach at the start of last month. True, Theresa May’s draft withdrawal agreement now looks doomed, but that was always a possibility. If you are the type of property investor who frets about political risk, why make an approach for a large owner of UK shopping centres two months before parliament votes?
Shares in poor old Intu fell by 40% to 114.5p, leaving chief executive David Fischel to whistle cheerfully that prospects are brighter than suggested by the “negative” market sentiment towards retail property. The same tune was heard when the last bidder, Hammerson, walked away. This difference this time is that Intu is cutting its dividend in the interests of saving cash. Positive vibes may remain elusive.
