Unilever CEO retires after investor row, replaced by insider Jope

LONDON (Reuters): Unilever Chief Executive Paul Polman is retiring less than two months after a damaging row with shareholders and will be succeeded in January by Alan Jope, the head of the Anglo-Dutch group’s beauty business.

Paul Polman, chief executive officer of Unilever Plc, attends the MEDEF union summer forum on the campus of the HEC School of Management in Jouy-en-Josas, near Paris, France. - REUTERS

Polman’s exit comes after the maker of Dove soap and Ben and Jerry’s ice cream was forced to scrap a plan to move the consumer goods group’s headquarters to the Netherlands in October, following an investor revolt.

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 is also a former leader of its China business 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.

At the helm of Unilever for 10 years, Polman, 62, generated big returns for shareholders totalling 290% 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 Anglo-Dutch structure by shifting its headquarters to Rotterdam. That provoked an angry reaction from UK-based shareholders as Unilever would have left the UK FTSE share index, forcing some to sell.

Polman and 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. 

Bernstein analyst Andrew Wood said some investors were also irked by what they considered a “preachy” style on issues such as sustainable living 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. 

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

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

Unilever veteran Jope joined the company in 1985. He will be paid a fixed salary of EUR 1.45 million ($ 1.65 million) plus a target annual bonus of 150% of fixed pay in his new role as CEO.

He was named in the job after what the Chairman called “a rigorous and wide-ranging selection process”, which analysts Bryan, Garnier and Co. said had been led by recruitment firm Egon Zehnder.

Credit Suisse analysts said the appointment of Jope meant Unilever was likely to stick with Polman’s strategy, which includes hitting a target of underlying operating margin of 20% by 2020.

“Jope has done a good job at beauty and personal care, is well known by investors and represents continuity of strategy,” they said.

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 GBP 1.4 million but with bonuses took home a total package of about GBP 10 million, will stay on for six months to support Jope’s transition into the role, Unilever added in its statement.