Maker of detergents, diapers Procter & Gamble faces seat fight from Peltz’s Trian
NELSON Peltz’s Trian Fund Management began a proxy fight to win a board seat at Procter & Gamble, characterising the maker of detergents and diapers as a lumbering giant whose stock has underperformed its peers.
Trian will seek a seat for Peltz at P& G’s annual shareholder meeting, according to a proxy filing Monday with the Securities and Exchange Commission. The firm, which initially revealed its position in February, now holds 37.6 million P& G shares, or about 1.5 per cent. It’s not seeking a breakup of the company or a new chief executive officer, but rather to shake up its “slow-moving and insular” culture, according to the filing.
P& G CEO David Taylor is struggling to reignite sales growth at the maker of Tide laundry detergent and Pampers diapers as it faces assaults from cheaper rival brands and retailers that are keeping a tighter rein on inventory to defend themselves from online competition. P& G shares are showing a 5.1 per cent total return for shareholders since the start of the year, trailing gains of 29 per cent for Unilever in local currency terms, and 12 per cent for Colgate-Palmolive, according to data compiled by Bloomberg.
“Structural and organisational bureaucracy may be preventing management from identifying and responding to commercial opportunities in a timely manner, hindering product innovation and dampening sales growth,” Trian said in the filing.
The consumer company said it has “maintained an active and constructive dialogue” with Trian since its investment, according to a statement last Monday.
“P& G’s board and management team are keenly focused on executing the company’s strategy to drive innovation, accelerate organic sales and volume growth, improve productivity and cost structure, and strengthen P& G’s organisation and culture. The board is confident that the changes being made are producing results, and expresses complete support for the company’s strategy, plans, and management.”
With a market capitalisation of US$ 223 billion ( RM1 trillion), P& G would be the largest company to face a board seat proxy fight.
The shares gained 0.6 per cent to US$ 87.59 in early trading in New York after the filing was posted.
Shareholders are frustrated with the direction of this “very slow-moving” company, said Ali Dibadj, an analyst at Sanford C. Bernstein & Co., who has an outperform rating on the shares.
“We’ve been advocates for a long time for cost reductions, simplifications for organisations and better incentives for management,” Dibadj said in an interview. Peltz’s goals are in line with this, he said.
Trian hired former P& G Chief Financial Officer Clayton Daley to advise on the matter. Trian will compensate Daley, who spent 35 years at the company before retiring in 2009, with a total of US$ 250,000 to his family’s charitable foundation. — WP-Bloomberg