Chief concerns

If the quality of a company’s investor relations effort depends crucially on having effective support and input from senior management, then Unilever’s IR department is in a strong position.  

Paul Polman, Unilever’s CEO, enjoyed wide-ranging praise from members of the investment community in the interviews carried out by Mary Maude Research to identify the winners of this year’s IR Magazine Europe Awards. So much, indeed, that he won the award for best investor relations by a CEO at a large-cap company, by a handsome margin over Portugal Telecom’s Zeinal Bava and BASF’s Dr Jürgen Hambrecht.

According to one of the buy-side respondents to the research, ‘[Polman] has engineered a turnaround of Unilever by taking sensible steps to bring it up to speed with competitors. Investors and analysts alike are happy with the initiatives and believe there is still more to come.’

And if it’s unclear from that comment whether the investor is really talking about Polman’s running of the business rather than his contribution to IR, this one leaves no room for doubt: ‘It’s not just because Paul Polman is such an excellent speaker that he is rated so highly, but also because he has a really good eye for social trends and delivers the message with charm and conviction.’ Nor does this: ‘It’s the clarity with which he speaks that makes Polman stand out. He says it how it is and then delivers on strategy and targets.’

After joining the company in 2009 you won best IR by a CEO at IR magazine’s 2010 awards in what was basically your first year in the job. What does it take for the new CEO of a large multinational firm to hit the ground running?
Soon after I arrived at Unilever, the financial crisis made a huge impact on the business landscape and presented challenges at many levels for our business. But I have learned that you must use the opportunities created by a crisis so we set to work to use the situation to accelerate changes that were needed to make Unilever competitive. I think this helped increase the sense of urgency behind the transformation, which in turn was appreciated by investors.

In what ways have you put your own stamp on the IR strategy at Unilever?
While it is not a one-man show, I have ensured our communications bring to life the changes we have made in our approach to innovation: bringing bigger, better product developments and rolling them out quickly to more markets, and launching our iconic brands into new markets. I would also mention the decision to embed sustainability within Unilever’s business strategy and to ensure our investors really understand what an important differentiator this will be in the years to come.

I think I have also brought a clear sense of the priorities we have set within the business for the IR strategy. My guiding principle is that we need to make the right decisions for the long-term health of our business and our brands. This is reflected in a number of changes we made in our approach to IR.

Firstly, we stopped giving guidance. Giving specific short-term guidance puts pressure on the business to manage short-term numbers rather than make the right decisions for the long term. Secondly, we moved away from full quarterly financial reporting and moved to interim management statements for Q1 and Q3. This again allows a more informed discussion about the real progress being made in the business over a sensible time period.

Thirdly, and partly as a result of the first two, we have attracted investors that buy into our long-term investment case and have made ourselves less attractive to the hot money that thrives on news and short-term performance indicators.

What lessons and IR experiences did you bring with you from Procter & Gamble and/or Nestlé?
I brought a clear understanding of what drives investors and what is important to them, as well as a good knowledge of the consumer products business and what it takes to win and deliver consistent results.

In your opinion, what are the CEO’s primary responsibilities in respect of the IR program?
The CEO must set the strategic direction for the company and ensure this is communicated in the right way to investors. For example, having developed the new strategic growth framework for Unilever, I have insisted we hold our annual investor events in emerging markets as these are so important to Unilever’s growth strategy. And, as I mentioned above, I have also brought the sustainability theme to the foreground in our communications with investors.

Why do you think investors and analysts single you out for special mention year after year?
I think they appreciate what we are doing at Unilever, driving a large-scale transformation of a company during very challenging market conditions. I also think they appreciate that senior management spends enough time with investors explaining the progress and listening to their views – but not too much time; they want us to focus on managing the business.

Unilever has strong ties with Europe; Procter & Gamble has its historic roots in the US. How have your interactions with investors differed in your time at each company?
There might have been something in this a few years ago, but no more. Unilever has huge strength as an emerging markets business and this is what differentiates our discussions with investors.

You are a noted orator. How important is that to your communications with investors?
I’m not sure: I speak my mind about things I feel strongly about; this has served me well so far.

Is the time you commit to IR and the way you engage with investors changing?
As a result of the changes noted above I spend a focused amount of time with the right investors – those that are interested in the long-term development of the business. This is not changing: it is something we have been doing since I arrived at Unilever.

What is the biggest challenge you face in dealing with investors and/or analysts?
I am not sure I could single out a specific challenge. I enjoy my engagement with investors and analysts, and they each bring their own perspectives and points of view. I welcome the discussion and challenge, as long as the focus is on the long-term health and development of the business and not on short-term factors that might move the share price.

This article appeared in the August print edition of IR magazine.