UNILEVER chief executive Paul Polman has been known to quote a Dutch proverb, “Don’t talk, but clean”, to explain his self-confessed Calvinistic approach to delivery at the sprawling consumer goods company.
Polman may, in his own words, just want to “get on with it” at the company that owns brands ranging from I Can’t Believe It’s Not Butter and Flora to Persil and Surf washing powders. But following a failed £115bn hostile takeover bid from US rival Kraft Heinz earlier this year, he has endured weeks of questioning about his strategy and leadership. His love of sustainability has even been called into question.
The upshot has been a review of the Anglo-Dutch firm designed to enhance shareholder value, due to conclude by year-end. It includes selling off the margarine business, buying back €5bn (£4.3bn) of shares and raising its dividend by 12 per cent.
Polman has admitted that he needs to find a balance between not giving up on the firm’s worthy “long-term sustainable compounding model”, and satisfying an increasingly large group of shareholders who want to see the short-term returns. It’s a fine balance.
This week, the focus will be on Unilever’s first-quarter results, particularly on the performance in the margarine and spreads business. If it is not sold, the division may be spun out as a standalone business. Its future raises fundamental questions about the identity of Unilever, which was formed in 1929 by a merger between Merseyside soap makers Lever Brothers, and Margarine Unie, a Netherlands-based collection of margarine makers.
Identity is just one question for Polman to ponder as his pivotal review runs its course. However, at times he seems more interested in contributing to the government’s plans for a national interest defence to foreign takeovers. This may be understandable given his recent experience, but he risks distraction from the primary goal of maximising shareholder value. He has made that mistake before. If proof were needed that a central plank of a CEO’s function is to create such value – and to communicate the strategy needed to get there – then look no further than Polman.