Unilever on Friday said its board had withdrawn a proposal to move the headquarters to the Netherlands, after a growing tide of opposition by UK shareholders.
Earlier this week, influential proxy advisory firm PIRC had recommended shareholders to vote against the move.
It now appears Unilever’s reputation for valuing all stakeholders rather than just shareholders has landed the consumer goods firm in trouble when it tried to move its headquarters from London.
Interviews with UK shareholders, advisers and analysts paint a picture of Unilever as either miscalculating the level of dissent to becoming a single corporate entity based in the Netherlands, or dismissing it in the interests of a broader vision they were convinced was right.
“Better approaches are possible and the problems for shareholders were foreseeable,” said Iain Richards, head of responsible investment at Columbia Threadneedle Investments, one of the major institutional agencies to publicly oppose the move.
The change would have seen Unilever, the Anglo-Dutch maker of Marmite and Ben & Jerry’s ice cream, be kicked out of Britain’s blue-chip FTSE 100 index, forcing funds mandated to track the index to sell their shares and pressuring the price for remaining shareholders.
Small retail investors added to the momentum opposing the move — an ill-communicated reaction following a surprise $143-billion bid from Kraft-Heinz last year.
Being based in the Netherlands, with its different corporate law, was seen as a move that might have protected it from unwanted takeover bids in the future, among other incentives.
“Unfortunately, it started to get presented in the retail world in the context of Brexit, that ‘we want to keep Unilever British’, and I think that tipped it over the edge,” said one top-30 shareholder, who declined to be named.
“They were overly focused on the benefits to everyone, as opposed to the concerns of UK shareholders,” said Liberum analyst Robert Waldschmidt.
He characterised the U-turn as a “bloody nose” for Polman, who is likely nearing the end of a ten-year tenure, but said losing the vote outright would have been worse.
“It would have been like a vote of ‘no confidence’,” Waldschmidt added.
Public declarations of opposition to the move were around 12 per cent of its London-listed share capital.
CEO Paul Polman, who is expected to step down next year, was notably absent from the most recent public discussions of the move.