Unilever admits lessons learned in embarrassing HQ relocation U-turn

Marmite-to-Dove soap giant Unilever has admitted failing to talk to shareholders in the run-up to its ill-fated decision to move its corporate HQ to the Netherlands.

In a cross-party committee hearing with MPs, Unilever said it had learned “lessons” from recent actions, less than two weeks after an embarrassing U-turn saw it ditch plans to move from London to Rotterdam following investor pressure.

Peter Newham, director and executive vice president for reward at Unilever, told the Business, Energy and Industrial Strategy Committee that the group had
also failed to seek shareholder views earlier enough on pay plans for top bosses.

Rachel Reeves
Rachel Reeves

It comes after nearly 36% of Unilever investors voted against its executive pay plans in May after Paul Polman’s pay swelled to a mammoth 11.6 million euros (£10.2 million) and amid a raft of remuneration policy changes.

Committee chairwoman Rachel Reeves said there was a “pattern” of investor discontent at decisions being made by Unilever’s board.

She said: “Perhaps you could improve things by discussing things with shareholders a little bit sooner and therefore making recommendations as a board that your shareholders – the owners of the company – are more supportive of?

“Do you think there’s a lesson to be learnt?”

Mr Newhouse agreed and said there was also a “good lesson for us” after trying to push through significant changes to executive pay.

FTSE 100 photos
FTSE 100 photos

In the hearing with MPs, Royal Mail also admitted a “big mistake” after suffering a high-profile shareholder defeat over a salary rise for its new Zurich-based boss Rico Back and leaving package for former chief executive Moya Greene.

MP Peter Kyle accused Royal Mail of going “weak at the knees” in negotiations with powerful chief executives.

He said the company appeared to be “intensely focused on the needs of the chief executives and blind to the considerations of the shareholders”.

Orna Ni-Chionna, chairwoman of Royal Mail’s remuneration committee, said the firm failed to proactively talk to shareholders beforehand over the leaving payment for Ms Greene, which included a full-year cash bonus of £774,000.

Its pay plans were voted down by more than 70% of investors at its annual general meeting in July.

Ms Ni-Chionna said: “It was a big mistake for us to make.

“I really am embarrassed that we got this engagement with shareholders so wrong.”

The Committee also grilled Royal Mail over a £5.8 million payout to Mr Back made just before he was promoted from General Logistics Systems (GLS) – Royal Mail’s European parcels business – to the post of group chief executive.

Ms Reeves slammed the Royal Mail over board “complacency” following the payment, on which Mr Back did not pay UK tax.

She said the sum could have instead been used to employ more than 250 workers to deliver post for the group.

Ms Ni-Chionna denied complacency on the board and insisted “we are very keen Royal Mail survives and thrives”.