P&G claims victory over Peltz, but investor disputes vote

Procter & Gamble Co. declared victory in a bid to keep billionaire investor Nelson Peltz off its board, even as the activist’s hedge fund said the vote is still too close to call.

The world’s largest consumerproducts company said all 11 of its directors were elected, based on preliminary results. Minutes later, Peltz’s Trian Fund Management said the outcome will take more time and that it was awaiting certification by an independent inspector.

For P&G, the biggest company ever targeted by an activist in a proxy fight, the result is a vindication of its claim that it’s already tackling the shortcomings called out by Peltz. The investor argued that P&G suffered from a bloated structure and a lack of new brands favoured by younger shoppers.

While he hasn’t called for the replacement of chief executive David Taylor or a breakup of the firm, Peltz, 75, did suggest reorganizing the maker of Tide and Pampers into three largely autonomous units.

“We are encouraged that shareholders recognize P&G is a profoundly different, much stronger, more profitable company than just a few years ago,” the company said in a statement Tuesday.

The outcome came as bad news to investors, some of whom viewed Peltz as an advocate for their interests. The shares fell as much as 2.5 per cent to US$89.86 on Tuesday, marking the biggest intraday decline in about two weeks.

Peltz said he believed the vote margin was plus or minus one per cent. No matter what the outcome is, Taylor should put him on the board because so many shareholders voted in his favour, Peltz said.

“Even if they win, which I’m not sure they did, think about what Pyrrhic victory it is,” he said in an interview on CNBC. “Everybody but the current employees voted for us. Up and down the line.”

Over the years, P&G has struggled to churn out as many blockbuster products and overcome an alleged culture of bureaucracy. But Peltz has an outdated view of the company, Taylor said in an interview last month.

“He’s never asked virtually anything,” the CEO said at the time. “He hasn’t asked about strategy, people, what we’re doing.”

Peltz said on CNBC that P&G’s board didn’t give him a fair shake and never went over a 93-page white paper issued by Trian last month. He said he only met with Taylor and lead director James McNerney to discuss his plans and his only other interaction was with board member Ken Chenault during a brief meeting.

“I didn’t show them the white paper. We didn’t go through the white paper with them. They didn’t do their job,” Peltz said.

Peltz bought a US$3.5 billion stake in P&G earlier this year before embarking on the threemonth board fight.