Unilever handed chief executive Alan Jope a 42 per cent pay rise last year to almost £5mn after the company exceeded growth targets, partly because of price rises on its products made in response to inflation.
News of the increase in his pay packet comes as Unilever faces pressure from shareholders over its languishing share price and a failed £50bn bid for GlaxoSmithKline’s consumer health unit late last year.
Jope’s total remuneration rose to £4.9mn in cash and shares in 2021 from £3.4mn the previous year after his bonus payments jumped sharply, according to Unilever’s annual report released on Wednesday.
This was partly as a result of underlying sales growth — a key metric for consumer goods companies — of 4.5 per cent, up from 1.9 per cent the previous year.
The growth figure, which beat a company target of 3.5 per cent, was driven by higher prices: pricing contributed growth of 2.9 per cent at the maker of Magnum ice cream, Domestos bleach and Dove soap.
Andrea Jung, chair of Unilever’s compensation committee, said in a note to shareholders that the group’s remuneration committee had decided “after careful consideration . . . not to change the targets in response to volatile business conditions, nor to exercise discretion on the formulaic outcome, which will set the global bonus pool for all eligible Unilever employees”.
She added: “Our decision not to amend targets mid-year in light of significant inflationary conditions was taken to ensure that employees and executive directors are treated commensurately with the interests of our shareholders.”
Jope’s higher pay packet, made up of £1.5mn fixed pay and the rest bonuses, was 70 times the pay of the median Unilever UK employee, up from 55 times a year earlier.
But it was dwarfed by those received by his predecessor Paul Polman, who was paid a total of £11.7mn in 2018, his last year in the post, and a similar figure in 2017.
Graeme Pitkethly, chief financial officer, received a 16 per cent pay rise to £3.4mn for 2021.
Unilever’s share price was down 10.2 per cent to £39.46 during the year.
Jope and Pitkethly’s annual bonuses, partly paid out as deferred share awards, are based on company performance against targets that include underlying sales growth, free cash flow and underlying operating margin, where the group underperformed in 2021.
A longer-term management co-investment plan is based on similar factors over three years, plus a sustainability measure.
Jung acknowledged that “2021 was a year of volatility with continued impact from the Covid-19 pandemic and unprecedented global commodity inflation driven by supply constraints and demand spikes”.
Unilever faced criticism from some analysts ahead of its 2021 annual meeting for proposing changes to its remuneration policy that James Edwardes Jones, analyst at RBC Capital Markets, at the time said would “benefit Unilever’s senior executives at the expense of shareholders”.
They included targets for the proportion of the business that is gaining market share, which he said were set at “undemanding levels”. But the changes were voted through by 93.5 per cent of shareholders.