The British government was always deluding itself. The chances of Unilever, one of the world's three biggest consumer-products companies, staying put in London were about as high as Boris Johnson auditioning for the National Ballet. Unilever this week said cheers to London and is moving its unified headquarters to Rotterdam.
Paul Polman, chief executive of the company that stuffs refrigerators and pantries around the world with Ben & Jerry's, Marmite, PG Tips and Hellman's, said Brexit wasn't behind the company's decision to take a hop, skip and jump over the English Channel. That's a credible claim, mostly, but the board of directors would have been wary of the possibility of Britain crashing out of the European Union with no trade or customs deal. Prime Minister Theresa May's Brexit negotiations have, after all, been a shambles.
If Brexit wasn't the main driver for the move, what was? My guess is that leaving London was Mr. Polman's vote against the Anglo-American business model, which recognizes, indeed worships, the primacy of shareholder returns. Mr. Polman, a Dutchman, has always been a stakeholder capitalism kind of guy.
Unilever is an Anglo-Dutch conglomerate – market value $200-billion – whose British heritage goes back to 1884, when English industrialist William Lever started to make Sunlight Soap for the masses. Today, Unilever has an awkward and antiquated structure that gives it two head offices – London and Rotterdam – and a dual-shareholder listing. Unilever NV trades in Amsterdam (as well as New York); Unilever PLC trades in London. The shares in one cannot be converted into the shares of the other.
Investors were bucking for a simpler structure that would be less costly and make routine corporate business activities, such as mergers and acquisitions and spinning off businesses, easier and less lawyer-intensive. Last year, after Kraft Heinz of the United States made a US$143-billion lunge for Unilever – Mr. Polman rejected it within hours – the company came under pressure to streamline itself. The London-Amsterdam horse race was on. One of those head offices would have to go and London lost (Unilever is keeping its London listing, but it might get sacrificed at some point).
Amsterdam always had the edge and not just because the Dutch side of Unilever is bigger than the British side and has considerably more trading liquidity. It was because Dutch corporate law is a better corporate fit for Unilever's culture, as espoused by Mr. Polman, who has been Unilever's boss since 2009. British law dictates that a company's directors run a company "for the benefit" of shareholders. Dutch law dictates that shareholders' interests, while important, are not paramount. It also gives companies greater protection from hostile takeovers than British law.
Mr. Polman has always spoken about "sustainability" and long-term value, not just about pleasing shareholders with short-term returns and endless share buybacks. He ended quarterly-profit reporting and earnings guidance and told hedge funds, which he never considered "shareholders" in the classic definition of the term, that they would not be indulged.
Last year, after the aborted Kraft Heinz takeover attempt, Mr. Polman, quoted in The Guardian, said: "The financial market has changed and you need to be clear on what you want. Do you want short-term forces – that work for a few people, and make a few more billionaires – to be the dominant force? Or do you want the system to work for the billions that need to be served? It's a fundamental choice."
Cost-cutting, a dark art perfected by Kraft Heinz, was never Mr. Polman's focus even though he was well aware that the vicious cost-cutters had better profit margins than Unilever's, but for how long? "Graveyards are full of companies that have been cutting costs but ultimately not fulfilled their purpose to do anything useful for society," he said.
Unilever is not alone in climbing off the shareholder-value boat. Larry Fink, CEO of BlackRock, the world's biggest asset manager, used his annual letter to shareholders to lobby for "purpose-driven companies." A February study by the Global Strategy Group reported that two-thirds of Americans believe that companies "believe corporations have a responsibility to speak out on political and social issues."
The Dutch style of social capitalism can't declare victory yet even if more and more high-profile CEOs, such as Mr. Polman and Mr. Fink, are promoting the end of the shareholder-take-all strategy that has dominated corporate thinking at least since the Reagan and Thatcher eras. Focusing on shareholder returns does have one big advantage – it can be easily measured. Stakeholder capitalism has ill-defined goals. Should employee happiness and training be part of the value-return calculation and, if so, how should they be tallied?
Still, Unilever's choice of Amsterdam over London shows that the Anglo-Saxon capitalism model may finally be giving way to a fairer form of stakeholder capitalism. London may see other high-profile departures if Unilever's management style catches on. It could. The Anglo-American business model already feels so 20th century.
Eric Reguly