Plenty has been said about the Unilever debacle you can read most of the opinion on it in this week's magazine, out on Friday but the key point to come out of it for us is the importance of boosting the rights around and the enthusiasm for old fashioned shareholder democracy.
CEOs of big companies can easily fall into feeling that the firm they have been hired to run belongs more to them than to its shareholders. Very little good can come of this as Unilever's board and in particular its boss, Paul Polman, have found out.
In the immediate aftermath of the proposal to move the company's head office and domicile to Rotterdam, UK fund managers (ie, the representative shareholders for most of the rest of us) reported their concerns about the plan being entirely dismissed (a "dialogue of the deaf" says Neil Collins in the FT). No matter what they said or how often they said it (there were 200 meetings between Unilever and top shareholders) there seemed little sense that the board had any plans to listen.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
However, worse than how Unilever was treating its institutional shareholders was how it intended to treat ordinary investors who hold the individual shares (as opposed to units in funds that hold the shares).
In order for the scheme to have gone ahead, 75% of the shares had to vote, but a majority of all shareholders had to vote in favour. That was a tough call, but one that the firm had clearly decided to make a little easier for itself. How? By effectively disenfranchising the likes of you and me (I hold Unilever shares).
If, as I do, you hold your shares on a platform, it is the platform who is the owner on the shareholder register. Look down a lot of registers at the moment and you will see Hargreaves Lansdown at the top, for example. That's not because Hargreaves Lansdown loves the stock, but because the retail investors that use the HL platform love it and own it.
However, Unilever was planning not to give each retail shareholder their votes, but to treat the listed shareholder as the actual and only shareholder. This isn't normal (platform investors can usually vote at AGMs etc if they ask their provider) and it isn't right, either.
We should all be pleased that the UK often utterly useless institutional shareholders made such a fuss about Unilever's plan to move 12% of investors went public with their disapproval, but a good many more must have told the board they were going to vote against it (otherwise the plan would surely not have been pulled).
More of that kind of activism would be good (there's still a fair amount of work to be done on pay, for example ). But for a shareholder rebellion to really represent the kind of shareholder democracy I want to see (the one that will save capitalism!), it needs to include the ability for retail investors to rebel as and when they want as well. This one did not.
-
Pension warning: one in five don’t know how much is going into their pensionHow to check your pension contributions and why it matters
-
50,000 power of attorney applications rejected – how to avoid common mistakesA freedom of information request shows that thousands of lasting power of attorney (LPA) applications are rejected due to errors. We explain how to avoid mistakes and reveal tips to make the process as straightforward as possible
-
Inflation is hurting Unilever, but investors shouldn’t give up just yetAnalysis Consumer goods group Unilever has been underperforming as inflation bites. It's made errors in the past, says Rupert Hargreaves, but with valuable brands and a global reach, it still has plenty going for it.
-
Why GSK should turn down Unilever’s billionsNews Unilever has offered GSK £50bn for its consumer division. But while the cash will be a temptation, the deal is not in the interests of shareholders or of anyone else, says Matthew Lynn.
-
Unilever slides and GSK bounces after GSK knocks back £50bn bidNews Unilever shares fell to their lowest level in around five years, after its £50bn takeover bid for GSK’s consumer health unit was rejected.
-
Unilever puts the U in U-turnFeatures The Anglo-Dutch consumer-products giant irritated shareholders with plans to redomicile in Rotterdam. Now it has beaten a retreat. Marina Gerner reports.
-
Unilever leaves BritainFeatures Consumer-goods giant Unilever has chosen Rotterdam over London for its unified headquarters. Takeover threats and taxes played a part. Alice Gråhns reports.
-
Nick Train: the value in UnileverFeatures Quality growth companies are still cheap relative to history, thinks fund manager Nick Train.
-
Unilever should snub the “crazy cost-cutters”Features Unilever could soon dispose of some of its best-known brands in a bid to appease shareholders. But should it listen to them?
-
Unilever sees off KraftFeatures US food giant Kraft, which swallowed up Britain’s Cadbury in 2010, has failed – for now – to do the same to Unilever. Ben Judge reports.
