The Independent: Unilever governance: “oil giant's travails”
3 July 04
As shell wrestles with corporate governance and structural reform, you might have thought that the oil giant's travails would have prompted some soul searching at that other great Anglo Dutch behemoth based just across the river Thames, Unilever. Not a bit of it. The Unilever board is perfectly happy with the present dual domiciled nature of the company, and has no intention of changing it, or indeed altering by one jot the way the board is structured, functions and appoints its members.
Unilever is a little bit different from Shell in that it already has a unified board. Unlike Shell, the two publicly quoted halves of Unilever - Unilever PLC (British based) and Unilever NV (Dutch based) - also have an equal interest in the group's combined assets. Nor is there any crisis in the company's affairs that would seem to demand change. Unilever has disappointed investors with sluggish sales growth, but the shares remain relatively close to their all-time high and there are few worries about the company's long-term future.
Nonetheless, there are some peculiarities which mark the company out from the conventions of modern corporate governance codes. One of these is that the role of chairman and chief executive is combined. What's more there are two of them - Niall Fitzgerald and Anthony Burgmans, the one answerable to the British half, the other to the Dutch domiciled company. While this might seem a very effective system of corporate governance control in that the two are able to oversee each other, it can't be good for swift and decisive action. Consultation and discussion must constantly get in the way, and there is obvious potential for messy compromise, fudge or ever total paralysis.
Yet in practice, the upside seems to outweigh the downside. Swift and decisive action in business can often lead to gigantic mistakes. The partnership structure of two equally powerful executive chairmen seems to work rather well. When he became one of those chairmen seven years ago, Niall Fitzgerald promised to change the company from a supertanker into a flotilla of fast-moving frigates, so as to make it better adapted to fast-changing consumer trends. Plenty of progress has been made, but of its nature Unilever is a not the place for revolutions.
That's the trouble with leviathans. Any change beyond the incremental and evolutionary risks killing off the beast altogether. Yet Unilever is a company that has stood the test of time. At 75 years of age, Unilever is one of the oldest companies in the Fortune 500, and I think it fair to say it is better placed today than ever. Even on diet, health and social responsibility, the big food issues of our time, Unilever has largely managed to position itself on the side of the angels, which for a global foods company is quite something. That's as much a tribute to the company's peculiar corporate governance structures as anything else. If it ain't broke, why fix it?
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