Unilever’s great sin, according to its critics, was being tin-eared to the concerns of its largest shareholders. So who does the consumer goods company pick as its new chief executive in the wake of the turmoil of the Alan Jope era?
Step forward Hein Schumacher, a food industry executive who has had nothing to do with institutional investors for the past nine years and is virtually unknown by mainstream fund managers. Schumacher’s berth since 2014 has been at Royal FrieslandCampina, a privately controlled dairy co-operative owned by 15,000 farmers in the Netherlands, Belgium and Germany.
No one doubtless has a more sympathetic ear for the tribulations of farmers who supply the raw milk to his cheese and yoghurt factories. But he is a slightly surprise choice for a company wanting to mend bridges with the big shareholder battalions of the City and Wall Street.
People like Terry Smith, who lambasted the company a year ago over what he saw as its excessively woke purpose-led strategy at the expense of investor returns. Or many other Unilever shareholders, appalled when Jope revealed he was thinking about gearing up and paying more than £50 billion for the consumer products division of GSK, the business subsequently demerged as Haleon. Did he not realise they were already pretty fed up with his underwhelming stewardship of existing Unilever brands and were in no mood to pony up for a new spree?
The idea was quickly dumped. Jope, his authority diminished, was left to limp on and will only finally hand over the reins in July. He has since done rather well, in fact, in the past year outperforming Nestlé, Danone, Procter & Gamble and Colgate-Palmolive, but the damage was done.
It doesn’t speak well of the board that it will have taken so long to resolve this problem. But then they were equally culpable. To have dealt more brutally with Jope would have been to admit to their own failings: they had approved every step of Jope’s negotiation with GSK. There’s no greater brake to business reform than ego — not just of the bosses, but of the non-executive directors there to hold them to account.
Schumacher has the benefit of being both an outsider and having the backing of Nelson Peltz, the activist investor. He’s well-versed in developed and developing markets. And while his current brands tend to be small and parochial, he learnt the blockbuster brand game at Heinz. The one glaring omission in his CV is that lack of familiarity with the institutional shareholding world. It needs to be a priority if Unilever is to shake off its reputation for being deaf to its owners.
How it’s done
In contrast to Unilever, Legal & General yesterday began a textbook handover of power. First, chief executive Sir Nigel Wilson has announced his planned departure before the rumour mill starts swirling and while his personal stock is riding high: by one measure he has helped to produce a total shareholder return of 641 per cent since arriving as finance director in 2009.
Second, his chairman Sir John Kingman has been at the company long enough to know what is needed in Wilson’s successor, but with plenty of runway to see the recruit well bedded in before he thinks about going himself. Kingman reaches his nine-year chairmanship limit in 2025.
Third, there is the luxury of time. Wilson has agreed to stay for the next year. That will allow the headhunter Spencer Stuart to walk the whole length of the shop in search of suitable candidates, while giving internal prospects every opportunity to put their case.
888’s losing streak
Amazing what an inquisitive chief risk officer can dig up. It only took a few weeks for the newly appointed CRO at the betting group 888 Holdings to smell something not right at his new employer. Cue yesterday’s brace of bombshells: first, the admission of failings on money laundering and know-your-customer rules; and second the instant sacking of the chief executive Itai Pazner.
The group was under the cosh after taking on huge amounts of debt to buy William Hill betting shops in the UK last year at just the wrong moment — with discretionary spending under pressure and borrowing costs rocketing. Oh, and the finance director quit less than three weeks ago. After yesterday’s plunge, the shares are down by 71 per cent from a year ago. The largest outside shareholders like Abrdn, JP Morgan and Artemis must wonder what kind of a crummy casino they’ve blundered into.
They deserve more than the short statements yesterday, which raise more questions than they answer. In particular, have the regulators in Gibraltar been told and are they now investigating? Ditto, Britain’s Gambling Commission, which fined the company £9.4 million less than a year ago for anti-money laundering failings. Second offences can be very expensive.
This feels like a story with longer to run. The chairman Lord Mendelsohn, a former lobbyist and Labour shadow business minister in the Lords, needs to get a grip fast.
The City is poorer
Sad news. Jonathan Compton, the maverick founder of the now-defunct Bedlam Asset Management, has died, aged 69. Compton, a critic of high fees, once hired sandwich-board people to parade outside Schroders and Merrill Lynch with placards saying, “They’re bleeding you dry” and “You’re being fleeced”. The City is a little duller without him.
