Unilever shareholders reject pay plan in big blow to incoming chief

Unilever shareholders have delivered an emphatic rejection of the consumer goods group’s executive pay plan in a setback for its incoming boss Hein Schumacher before he starts in July.

Almost 60 per cent of votes at the FTSE 100 company’s annual meeting on Wednesday were cast against its remuneration report, a scale of revolt rarely seen over the past two decades.

Before the vote, corporate governance experts had taken issue with Unilever’s plan to pay Schumacher a base salary before bonuses of €1.85mn — almost one-fifth higher than his predecessor Alan Jope, who received a total remuneration package last year of €5.4mn.

The rebellion follows investor disquiet over a lacklustre share price performance at the maker of Dove soap and Hellmann’s mayonnaise that was heightened by a botched £50bn bid for GSK’s consumer health business.

Jope, a 35-year veteran of the company, said in September that he would stand aside. The management change comes after the consumer goods group became a target for activist investor Nelson Peltz.

The vote against Unilever’s pay plan is one of only 13 such rejections at a FTSE 100 company since 2000, according to Sarah Wilson, chief executive of Minerva Analytics, proxy advisory voting service.

Unilever said it was “disappointed” by the advisory vote, adding: “We are committed to shareholder engagement and will consult over the next few months to listen carefully to feedback and determine any next steps.”

Shareholder adviser groups Glass Lewis and ISS had urged investors to vote against the company’s pay plan, raising concerns about Schumacher’s base salary on appointment.

ISS said the incoming chief’s salary was “significantly higher” than Unilever’s UK market peers and his current salary as head of FrieslandCampina, a Dutch dairy co-operative. Unilever had “not provided compelling justification”, ISS added.

Glass Lewis said it generally expected incoming executives to be appointed “at a discount relative to their predecessors”, with “any significant salary increases occurring on a phased basis”.

“Fixed remuneration is not directly linked to performance and may serve as a crutch when performance has fallen below expectations,” it added.

At the time of Schumacher’s appointment, the company had said that its plans for the incoming chief executive’s pay were “in line with Unilever’s existing remuneration policy” and that his salary “puts him at the median of our benchmark companies”.

Schumacher, who has previously worked at HJ Heinz, is to become Unilever’s chief executive-designate from the start of next month before assuming the position on a permanent basis in July when Jope will step down from the board.

The change in chief executive is taking place sooner than anticipated. Jope had been expected to retire at the end of the year.

Unilever’s biggest shareholders include US fund groups BlackRock and Vanguard, and Legal and General Investment Management in the UK.