The CEO Who Chose Long-Term Value Over Quarterly Profits
When Paul Polman walked into Unilever as chief executive in January 2009, the global economy was in freefall. The
When Paul Polman walked into Unilever as chief executive in January 2009, the global economy was in freefall. The financial crisis had sent companies scrambling for safety, and most chief executives were doing whatever it took to keep shareholders happy.
Polman did the opposite.
On his first day as CEO, he abolished quarterly earnings reports and stopped giving financial guidance to investors. Just like that. No more updates every three months. No more promises about what profits would look like.
Wall Street didn’t take it well. Unilever’s shares dropped 8 per cent.
Critics called him reckless. Shareholders grumbled. Some said he didn’t understand how modern business worked. But Polman knew exactly what he was doing.
The Problem with Quarterly Thinking
For years, Unilever had been ‘chasing its own tail’, cutting spending on research, development, and IT just to meet market expectations each quarter. The company was choosing short-term profits over long-term value, making decisions based on what looked good in three months, not what was right for three years.
By 2015, the average holding period for US stocks was just seventeen weeks. Exchange-traded funds moved even faster, holding shares for an average of only twenty-nine days. Polman compared this to the 1960s, when the average Unilever share was held for twelve years.
The system had turned investing into speculation. And it was destroying long-term value.
‘We had become victims,’ Polman explained. ‘We were developing our brand spending on a quarterly basis and not doing the right things, simply because the business was not performing.’
So he stopped playing that game.
A Bold New Plan
Polman told shareholders he was going to run Unilever for the long term. He would invest in capital spending, training, development, new IT systems, and brand building. These investments would take years to pay off. Quarterly numbers might suffer. But the company would be stronger for it.
He was transparent about his approach: Unilever might not deliver the highest profitability every year, but it would deliver consistently, year after year.
Some shareholders didn’t like it. They sold their shares. Polman was fine with that. He wanted to attract long-term investors who valued long-term value over short-term profits.
It worked. Unilever’s top fifty shareholders eventually had an average holding period of seven years or more.
The Sustainable Living Plan
In 2010, Polman went further. He launched the Unilever Sustainable Living Plan, a ten-year scheme with an audacious goal: double the company’s revenue while halving its environmental impact.
The plan set out to help more than one billion people improve their health and wellbeing, bring safe drinking water to 500 million people, and improve the livelihoods of 500,000 smallholder farmers. Unilever would source 100 per cent of its agricultural materials sustainably and send zero waste to landfill from all its factories.
Nobody had ever made such public commitments at this scale.
Many thought he was mad. How could you grow a business while simultaneously cutting its environmental footprint in half? The two goals seemed to contradict each other.
But Polman saw it differently. He believed that sustainability wasn’t a cost. It was a competitive advantage. Brands with purpose would grow faster. Companies that addressed real problems in the world would attract better talent. Long-term thinking would create better returns.
Fighting Off the Raiders
In February 2017, Polman faced his biggest test.
Kraft Heinz, backed by billionaire investor Warren Buffett and Brazilian private equity firm 3G Capital, launched a hostile takeover bid worth 143 billion dollars. They offered 50 dollars per share, an 18 per cent premium.
It was the kind of offer that most CEOs would have to consider seriously. But Polman saw it for what it was: a threat to everything he’d built.
3G Capital had a reputation. They bought companies, slashed costs by 30 to 40 per cent, replaced entire management teams, and rapidly increased short-term earnings. They were the opposite of everything Unilever stood for.
The company’s stock price had risen 144 per cent under Polman’s leadership, with total shareholder returns of 214 per cent. But that didn’t matter to 3G. They wanted the quick profit.
Polman fought back hard. He gathered his advisers, made an impassioned speech about defending Unilever, and wrote directly to Buffett and 3G Capital, making clear the offer would not have board support and that Unilever would use every tool to fend it off.
Just 48 hours after announcing their interest, Kraft Heinz withdrew the offer.
The battle became a turning point. It showed that Polman’s model, prioritising long-term value over short-term profits, building sustainably, focusing on all stakeholders, could stand up to the old model of quick profit extraction.
The Results
The critics said Polman was naive. Running a major corporation on purpose and sustainability? Impossible, they said. Shareholders would never go for it.
They were wrong.
By the time Polman stepped down in 2019 after ten years as CEO, he had delivered a 290 per cent total return to shareholders. The return was vastly superior to rivals and more than double that of the FTSE index.
Unilever consistently ranked first in the world for sustainability and as one of the best places to work. The company reached 1.3 billion people through health and hygiene programmes. It reduced greenhouse gas emissions from manufacturing by 65 per cent. It achieved zero waste to landfill across all factories.
The company’s sustainable living brands, those with purpose at their core, grew 40 per cent faster than the rest of the business.
In 2018, the Financial Times called Polman ‘a standout CEO of the past decade’.
What Companies Are Really For
Polman’s story isn’t just about one man or one company. It’s about a fundamental question facing business today: what is a company for?
Is it just to maximise short-term profits for shareholders? Or does it have a broader responsibility to employees, communities, the environment, and society?
Polman proved that the two goals don’t have to conflict. In fact, companies that focus on long-term value over short-term profits often perform better than those chasing quarterly earnings.
‘I think it is a cop-out,’ Polman said when asked why more CEOs don’t take this approach. ‘Any CEO can decide that he shouldn’t get paid too much. Any CEO can decide to think long term. I think it is courageous leadership that is missing. The excuse is that the market won’t let you. We have a licence that is much broader than any of the CEOs claim.’
Since leaving Unilever, Polman has continued his mission. He co-founded Imagine, an organisation helping businesses tackle poverty, inequality, and climate change. He co-wrote a book called ‘Net Positive: How Courageous Companies Thrive by Giving More Than They Take’.
The companies that genuinely help the world, he argues, end up with stronger profits and more loyal customers.
The Lesson
Wall Street panicked after Polman scrapped quarterly reporting. Critics dismissed his Sustainable Living Plan as unrealistic. And when he fought off Kraft Heinz, some accused him of putting ideology ahead of shareholder value.
But he was playing a different game entirely. He was building a company that would last, that would create long-term value over short-term profits, that would make the world better.
And in the end, the shareholders who stuck with him were rewarded handsomely.
Leading with purpose isn’t weakness. It’s vision that outlives profit
Sources
- Harvard Business Review – “Captain Planet” (June 2012)
- Inc.com – “Why Unilever Stopped Issuing Quarterly Reports” (January 2018)
- European CEO – “Unilever CEO Paul Polman is redefining sustainable business”
- JUST Capital – “Former Unilever CEO Paul Polman Explains How He’s Building a Movement of CEOs to Change How the World Does Business”
- Wikipedia – “Paul Polman” n
- The Globe and Mail – “How Unilever won over shareholders with its long-term approach” (October 2017)
- Unilever – “Unilever celebrates 10 years of the Sustainable Living Plan” (October 2020)
- CNBC – “Kraft Heinz Unilever battle threat to capitalism” (March 2017)
