P&G Pushes Back Against Trian's Peltz, Says 'No Compelling Rationale' For Board Seat

Aug 1 2017 | 11:16pm ET

Consumer products conglomerate Proctor & Gamble fired back at activist investor Nelson Peltz’s request to join the company’s board of directors on Tuesday, saying the Trian Fund Management executive was not entitled to a seat and is getting poor advice from a retired executive out of touch with the firm’s current operations. 

Trian, one of P&G’s largest shareholders with a 1.5% stake worth $3.4 billion across several fund vehicles, increased pressure on the company in mid-July by filing a proxy statement with U.S. securities regulators that contained Peltz’s nomination. In the filing, Trian detailed a range of concerns, including deteriorating organic sales growth, underperformance relative to its peer group and the S&P 500, insufficient cost-cutting progress and a overly bureaucratic structure.

At the time, Trian also ruled out typical activist tools such as a breakup of the firm, replacement of the CEO or directors, or the addition of significant leverage, among other things. 

In proxy materials filed with the SEC on Tuesday, P&G management urged shareholders to vote against Peltz’s proposal at the company's annual meeting in October, saying he has offered little in the way of new ideas, lacks a compelling rationale for a board seat, and that shareholders will be better served by re-electing its current slate of directors.

Also, Trian's decision to hire former P&G CFO Clayton Daley, who retired nearly ten years ago, as an advisor was compounding a "fundamental misunderstanding of P&G today and the operating environment [it] faces," the company added. 

Moreover, although P&G said it would listen to Peltz and welcomes communication from all shareholders, it detailed a range of cost savings and productivity improvements during fiscal 2017 in the proxy filing and said that putting Peltz to the board “could derail the successful execution” of P&G’s strategy. 

Trian Fund Management was founded in November 2005 by Peltz, Peter May and Ed Garden. It manages more than $12 billion in assets and callable commitments.

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