Corporate Governance at Unilever
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Case Code: CGOX012 Case Length: 15 Pages Period: 2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.300 Organization: Unilever Industry: FMCG Countries: UK Themes: - |
Abstract Case Intro 1 Excerpts
Excerpts
Background Note
In 1885, William Hesketh Lever and his brother formed Lever Brothers. They introduced Sunlight, the world's first packaged, branded laundry soap. Sunlight was a success in Britain, and within 15 years Lever Brothers were selling the soap worldwide. Between 1906 and 1915 the company grew through acquisitions. Needing vegetable oil to make soap, the company established plantations and trading companies around the world. During World War I, Lever began using its vegetable oil to make margarine and also started acquiring fish shops, canned foods, meet and ice cream businesses. Rival Dutch butter makers, Jurgens and Van den Berghs were pioneers in margarine production. In 1927, they created the Margarine Union, a cartel that owned the European market. The Margarine Union and Lever Brothers merged in 1930, but for tax reasons formed two separate entities as Unilever PLC in London and Unilever NV in Rotterdam, the Netherlands...
Business Segments
Unilever had diversified into various businesses over a period of time. The major business segments were Foods, Home and Personal care. Under Food segment, Unilever marketed different types of food products. These included savoury & dressings, spreads and cooking products, ice cream and frozen foods, health & wellness, and Beverages...
Board Structure
Unilever reviewed its governance structure in the light of developments in the UK and the USA. It also followed the progress of the Tabaksblat Committee's deliberations in the Netherlands and Combined Code of UK Listing rules. Corporate governance requirements in the Netherlands and the UK varied. The concept of the non-executive director, as recognized in the UK, was not a standard feature of corporate governance in the Netherlands. The supervisory board, as recognized in the Netherlands, was unknown in the UK. It had hitherto not been considered practicable to appoint supervisory or non-executive directors who could serve on both Boards...
Directors' Compensation
Remuneration Policy
The objective of Unilever's remuneration policy for directors was to attract, motivate and retain top class business executives who were able to direct and lead a large global company and to reward them accordingly based on performance...
Investor Relationship
The Financial Director had lead responsibility for investor relations, with the active involvement of the chairmen. The Investor Relations Department organized presentations for analysts and institutional investors. Briefings on quarterly results were given via teleconference and were accessible by telephone or via company website. Both NV and PLC communicated with their respective shareholders through the AGMs. At the AGMs, each chairman gave a full account of the progress of the business over the last year and a review of the current issues...
Exhibits
Exhibit I: Composition and Category of Directors as on Jan 2003
Exhibit II: Unilever: Board of Directors as on Jan 2003
Exhibit III: Unilever: Members of Individual Committees
Exhibit IV: Unilever: Share Options Allocated for the Directors
Exhibit V: Unilever: Aggregate Remuneration of Directors
Exhibit VI: Unilever: Directors' TSR long-Term Incentive Plan
Exhibit VII: Unilever: Directors' Interests, Share Capital
Exhibit VIII: Directors: TSR Long term Incentive Plan
Exhibit IX: Unilever: Fees Paid to Advisory Directors In 2002
Exhibit X: Unilever: Advisory Directors Share Capital
Exhibit XI: Unilever: Service contracts of Directors
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