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Hanover - Uncertain Times Require Uncommon Sense

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10 Oct 2018

Oh, how the mighty have fallen! For almost 10 years, Unilever CEO Paul Polman has been a corporate rock star.

Scrapping quarterly financial reporting at the consumer goods giant to focus on the long term? Tick.

A public evangelist for the duty of large companies to look beyond shareholders and serve the public good? Tick.

Guardian of his company? Well, he fought off a £100bn takeover attempt by America’s’ Kraft Heinz just last year.

On course to deliver his promise of a 20 per cent margin by 2020. Big ticks.

And then came, seemingly, deafness and over-reach.

On the final stretch before standing down at around the 10-year mark, Polman hatched the plan which laid the company low last week.

He and his senior colleagues wanted to move from their full dual-listing in London and the Netherlands, and become headquartered solely in Rotterdam.

The government there promised new tax privileges and the rules against hostile takeovers are stricter. So – by no means a silly idea.

But it has come to naught, with the attempt called off several days ago after weeks of headlines warning about a shareholder revolt.

Five clichés help to explain how such a talented team got it so very wrong:

Clever people make stupid mistakes.

The rules in place to protect the current UK owners of the company specified that three quarters had to approve.

It is surely not Monday-morning quarter-backing to suggest that clear incentives for a “Yes” vote would be required.

Even now, nobody seems clear on a single such incentive. Which brings us to…

Follow the money.

People and institutions buy shares to make money, not to lose it. Simple, right?

Yet the Unilever plan meant that funds obliged to hold a certain portion of UK shares faced a forced fire-sale.

The brainboxes at Unilever must be frustrated that they could not find a way to reward a “Yes” vote, or give the UK shareholders a continued stake in the company’s bright, new, Rotterdam-based future.

Stick to your knitting.

A lot of PR folks and Generation Z types focus on companies’ records when it comes to the environment and social responsibility.

So does Mr Polman.

He was reportedly at a UN forum on food poverty last week just as the investor rebellion peaked.

Any CEO needs to prioritise relations with the big shareholder groups, not delegate them the way Polman seems to have.

Don’t ask a question unless you already know the answer.

Unilever of course insists it held hundreds of meetings with shareholders ahead of trying to turn its back on London.

These investors now insist they were clear from the off that they would not support abandoning the FTSE 100.

Something must have got lost in translation, which is what would worry me if I were a shareholder. How did the Unilever seniors mistake a “no” for a “yes”???

Victory has a thousand fathers, defeat is an orphan.

So who’s taking the rap?

If there’s been a fulsome apology or a “lessons learned” script, it’s been under-publicised. Unilever says it is examining other options for simplifying its ownership structure.

What, with Brexit on the horizon? Rather than pause and take stock?

This article was originally published in PR Week.