Unilever plc (UL) - Get Report said Friday that it will scrap plans to simplify its corporate structure, a move that included re-locating its quarter headquarters from London to the Netherlands, amid widespread shareholder criticism.
Unilever said that after an "extensive period of engagement with shareholders", the board had found that there was insufficient support for the restructuring, which would have seen both the move from London and the likely removal from the London Stock Exchange and the FTSE 100. Shareholder advisory service Pensions Investment Research Consultants, or PIRC, had recommended to vote against the plan, which would have seen the de-listing of U.K. and Dutch shares and the introduction of single entity shares listed only in the Netherlands.
"Unilever has built a long track record of consistent and competitive performance," said chairman Marijn Dekkers. "The Board continues to believe that simplifying our dual-headed structure would, over time, provide opportunities to further accelerate value creation and serve the best long-term interests of Unilever."
"The Board will now consider its next steps and will continue to engage with our shareholders," Dekkers added. "We will proceed with the plan to cancel the NV preference shares, further strengthening our corporate governance."
Unilever plc shares, which fell 3.5% on the session yesterday, were 1% lower by mid-day in London and changing hand at 4,038 pence each while the Dutch listed shares fell 0.22% in Amsterdam.
The consumer brands group, which makes Ben & Jerry's ice cream as well as Dove soap, had argued that its proposed changes would strengthen its governance, giving shareholders "an equal voice" over its future based on a "one share, one vote" principle.
However, the plans would have ultimately meant that many U.K. shareholders, particularly investment funds that track broader indices such as the FTSE 100, would be forced to sell their holdings in a declining market once the plans was put into place and the stock was removed from the London benchmark.
"Unilever might be able to convince European shareholders that the move makes sense for the company and for them as investors in the long term, but it's hard for a UK investor to see an incentive to vote in favour," said Royal London Asset Management's head of sustainable investments Mike Fox said. "Should the motion succeed, we would be forced to sell our holdings in Unilever plc across a number of our funds, something we do not believe would be in the interests of our clients."