Proctor & Gamble Names Trian's Peltz To Board Despite Proxy Win

Dec 19 2017 | 10:58pm ET

Two months after narrowly defeating activist investor Nelson Peltz in a bitter proxy battle, consumer products conglomerate has named the Trian Fund Management founder to its board anyway.

The company announced the change late last week. Peltz’s addition, along with the seating of Novartis CEO Joseph Jimenez on the board, raises the company’s director count to 12.

In a shareholder letter, P&G CEO David Taylor cited the close proxy results and the significant number of P&G shareholders that voted to put Peltz on the board as reasons behind the move. 

The proxy fight was the largest ever for a U.S. company and included a post-vote recount and cost some $100 million in mail, phone and advertising expenses. Ultimately, all eleven of P&G’s nominees were elected. Peltz’s term begins effective March 1 and P&G will re-nominate him again at next year’s annual meeting, the company added in a statement. 

Peltz’s Trian Fund Management is one of P&G’s largest shareholders, owning more than $3.5 billion in stock. Prior to the vote, Trian detailed a range of frustrations with P&G, including slowing organic sales growth, underperformance against both its peer group and the S&P 500, insufficient progress on cost controls and what it described as an overly complex organizational structure.

Following “constructive engagements to get more closely aligned on strategic choices,” P&G has agreed not to be “predisposed” to take on excessive debt, reduce R&D spending, advocate for a break-up of the company or move the company out of its headquarters in Cincinnati. It also said it would further link executive compensation to sales and stock price performance.

Trian Fund Management, L.P. 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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