FINANCIAL TIMES: Unilever: no more pussyfooting please: Investors pin hopes on Anglo-Dutch reform: “Shell only embraced radical change after its reserving scandal.” (ShellNews.net) 3 Feb 05

By Martin Dickson

Published: February 3 2005

The words "radical reform" and "Unilever" fit about as comfortably together as "soap powder" and "glamour". Change at the bureaucratic Anglo-Dutch group tends to be slow and gradualist. But amid mounting concern over its lacklustre performance, the company needs next week to surprise investors with its willingness to embrace organisational change.

The City is expecting it to change aspects of its boardroom structure when it announces annual results a week today. The question is: how far should it go?

Its Dutch and UK businesses are separate legal entities, with separate listings and boards. Last year, in a concession to modernity, it agreed to create a single-tier board made up of the same people, but in true Unilever style the change did not go far enough. It still has two chairmen - Antony Burgmans on the Dutch side, the newly-appointed Patrick Cescau in the UK - and that looks increasingly like a poor model, creating confused lines of command and constraints on change.

Rumours suggest that, at a minimum, the company may create a single executive chairman's role, to be filled initially by Mr Burgmans, with Mr Cescau becoming chief executive. But this would not be nearly enough. The two men would find it hard to carve out different roles. What the company needs is a non-executive chairman from outside, bringing a fresh perspective. That cannot happen overnight, but Unilever should state this as a clear goal.

It also needs to underpin its unity more practically: just as Royal Dutch/ Shell is doing, it should choose one headquarters from its two and merge the separate legal entities and share structures.

There are mutterings from inside the company that this could create unwelcome tax complications. But Shell has found a way round the tax issue with its creation of two classes of shares, and so surely can Unilever. Shell only embraced radical change after its reserving scandal. Procter & Gamble's bid for Gillette should be a similar wake-up call for Unilever.