Unilever shareholders have expressed outright rejection of the consumer goods group’s executive pay plan in a setback for its new boss Hein Schumacher before it starts in July.
Nearly 60% of votes at the FTSE 100 company’s annual meeting on Wednesday were cast against its compensation report, a scale of revolt rarely seen in the past two decades.
Ahead of the vote, corporate governance experts had contested Unilever’s plan to pay Schumacher a basic salary before bonuses of €1.85m, almost a fifth more than his predecessor Alan Jope, who last year received a total compensation package of €5.4 million.
The rebellion follows investor concern over the poor share price performance of Dove soap and mayonnaise maker Hellmann, heightened by a failed £50bn bid for GSK’s consumer health business.
Jope, a 35-year company veteran, said in September that he would step aside. The takeover comes after the consumer goods group became a target for activist investor Nelson Peltz.
The vote against Unilever’s salary plan is one of only 13 such rejections at a FTSE 100 company since 2000, according to Sarah Wilson, chief executive of Minerva Analytics, an advisory proxy voting service.
Unilever said it was “disappointed” by the advisory vote, adding: “We are committed to shareholder engagement and will consult over the coming months to listen closely to feedback and determine any next steps.”
Shareholder advisory groups Glass Lewis and ISS had urged investors to vote against the company’s salary plan, raising concerns about Schumacher’s base salary at the time of the appointment.
The ISS said the incoming boss’s salary was “significantly higher” than Unilever’s UK market colleagues and his current salary as head of FrieslandCampina, a Dutch dairy cooperative. Unilever “has not provided a convincing justification,” ISS added.
Glass Lewis said incoming executives are typically expected to be appointed “at a discount to their predecessors,” with “any significant salary increases occurring on a phased basis.”
“Fixed remuneration is not directly linked to performance and can act as a crutch when performance has fallen below expectations,” he added.
At the time of Schumacher’s appointment, the company said its plans for the incoming chief executive’s pay were “in line with Unilever’s current pay policy” and that his salary “places him at the median of our reference”.
Schumacher, who previously worked at HJ Heinz, will become Unilever’s chief executive officer from early next month before taking up the position on a permanent basis in July when Jope steps down from the board.
The change of CEO is happening ahead of schedule. Jope was expected to retire at the end of the year.
Unilever’s largest shareholders include US fund groups BlackRock and Vanguard and Legal and General Investment Management in the UK.
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