Your Unilever vote matters after all

You are a small shareholder in Unilever. You do not much care for the corporate flit to The Netherlands, but think that voting your 100 shares against the move is pointless given that there are 1,190,520,545 other shares available to vote.

You are wrong. The “simplification” proposal requires a 75 per cent majority of Unilever plc shares voting for the resolution to pass, and it also needs a majority of voting shareholders to approve. In other words, your holding will count the same as an institutional holding, and if enough small shareholders vote No, the proposal will fail, even if the 75 per cent majority is reached.

This appears to be the key paragraph in the 120 page document: [Simplification is conditional on] “the approval of the UK scheme by a majority in number of plc shareholders, present and voting, whether in person or by proxy, at the plc Court Meeting or any adjournment thereof, representing not less than 75 per cent. in value of the plc shares (including plc shares represented by plc ADSs) that are subject to the UK scheme voted by such shareholders.”

In other words, the votes of real shareholders are important, and may even be crucial. The meeting, on 26 October, promises to be much more interesting than the Unilever directors expected.

Nest egg’s flown to America

The pension fund, so the textbooks explain, allows the long-term savings of today’s workers to be invested in businesses, providing more jobs and generating tomorrow’s profits. The dividends then pay for the pensions of the retired workers.

While most people grasp this, when it comes to where their money goes, few have a clue. The National Employment Savings Trust is the default home for pension contributions under auto-enrolment, and as the minimum contributions ratchet up, the cash is pouring in, over £3bn from nearly 7m members and their employers.

So where’s it gone? To America, every one of the 10 largest holdings in Nest’s flagship fund, with Apple, Microsoft and Amazon the top three. Since these technology giants are widely assumed to be the future, this may seem reasonable on a 40-year view, although they have little to do with providing the UK jobs of tomorrow.

Then there is Exxon Mobil, 7th in Nest’s portfolio, an altogether different prospect. The millennials whose savings are going into Nest claim to be “socially aware” and many have convinced themselves that oil is either evil or over, or both.

Cambridge staff and students, for example, are agitating for the university’s £3.3bn endowment fund to dump its holdings in fossil fuels. Instead, CIO Nick Cavalla and three senior investment managers have dumped them, arguing privately that the protests were making their job impossible.

Investment management is as much art as science, as Richard Oldfield elegantly summarised in his memoir, Simple But Not Easy.  The Cambridge artists had returned 13.8 per cent compound for the five years to June 2017, a performance that would be tough for their successors to match even without the revolting students.

Of course, if Big Oil is really blind to the future that the Cambridge Zero Carbon Society can so clearly see, then the replacement fund managers might decide to throw out BP, a highly liquid share with a solid balance sheet, yielding 5 1/2 per cent on a freshly-raised dividend, for something better. Best of luck finding it

The students and dons may feel better for their virtue signalling, but they are likely to be poorer. Besides, protesting is so much more fun than rational argument.

Tesco Jacks up the ante

The last time two of Tesco’s principal competitors agreed to merge, Britain’s biggest grocer so bamboozled the competition authorities that Morrisons nearly wrecked itself on the shambles that was Safeway. Everyone, it seems, has learned from experience. Tesco has not launched a spoiling counter-bid for Sainsbury or Asda, instead turning its attention to the growing threat from Lidl and Aldi, with this week’s launch of Jack’s, a blatant Lidldi lookalike.

Meanwhile the Competition  and Markets Authority has launched a full review of the Sainsda proposal, and may even be brave enough to stop what looks like a blatantly anti-competitive deal. Whether it works or not, Tesco’s move is a pro-active response. Sainsda, by contrast, looks like a counsel of despair.

This is my FT column from Saturday