P&G declares victory over investor for seat
Trian leader says vote in proxy fight might be too close to call.
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 was still too close to call.
The world’s largest consumer-products company said that all 11 of its directors were elected, based on preliminary results. Minutes later, Peltz’s Trian Fund Management said the outcome would 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 was a vindication of its claim that it is already tackling the shortcomings noted by Peltz. The investor argued that P&G suffered from a bloated structure and a lack of new brands favored by younger shoppers.
While he hasn’t called for the replacement of Chief Executive Officer David Taylor or a breakup of the company, 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 percent Tuesday, marking the biggest intraday decline in about two weeks.
Peltz said he believed the vote margin was plus or minus 1 percent. No matter the outcome, Taylor should put him on the board because so many shareholders voted in his favor, Peltz said.
“Even if they win, which I’m not sure they did, think about what a Pyrrhic victory it is,” he said 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 blockbuster products and overcome an alleged culture of bureaucracy. But Peltz has an outdated view of the company, Taylor said last month.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 met with only 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.
Peltz bought a $3.5 billion stake in P&G earlier this year before embarking on the three-month board fight. P&G is only the third proxy fight by Trian since Peltz co-founded the firm in 2005.
Trian notched a victory Monday with the appointment of co-founder Ed Garden to the board of General Electric.
Bill Ackman, another billionaire investor known for seeking management changes and company breakups, said Peltz’s differing ideas on P&G’s strategy were “a perfect reason to put him on the board.”