Nelson Peltz has told CNBC that the board seat battle was ‘the dumbest thing I’ve ever been involved with’ © Bloomberg
Procter & Gamble claimed victory in its battle with Nelson Peltz, saying the activist investor had been denied a seat on the consumer group’s board after the largest proxy battle corporate America has seen to date.
Shares in P&G lurched 2 per cent lower on the news, although investment firm Trian Partners, where Mr Peltz is chief executive, disputed the result, saying Tuesday’s vote was “too close to call”.
Mr Peltz told CNBC in an interview it was “as close to a dead heat as possible . . . if anything, it’s plus or minus 1 per cent.”
Trian bought a $3.5bn stake in P&G in February, giving it a roughly 1.5 per cent holding and representing almost a quarter of Trian’s fund. Mr Peltz had argued that P&G, maker of household brands such as Tide detergent and Gillette razors, has been stuck in the past and failed to adapt to significant shifts in consumer tastes and shopping habits.
Trian’s defeat comes a day after its chief investment officer was elected to the board of General Electric, raising expectations of success at P&G. Before the shareholder vote at P&G, Mr Peltz had won the backing of influential advisers including ISS and Glass Lewis, although the ballot was expected to be close.
More than 400 shareholders attended the vote at P&G’s annual meeting in Cincinnati, Ohio, and the company had warned earlier in the day that if a large number of investors voted with paper ballots, it would need to tally votes individually, likening it to a “Florida situation” — a reference to the 2000 US presidential election.
David Taylor, P&G chief executive, said “we’re certainly happy with the outcome”, adding that the company did not yet have a percentage breakdown of the preliminary voting results.
“The common message [from investors] is: the strategy the company is taking makes sense,” he said. “The push was: can we go faster? And that’s what we are working on.”
Trian said in a statement: “It will take more time to determine the outcome. We await the certified election results by the independent inspector of election.”
P&G, like other sprawling consumer goods companies, has lost market share and seen sales slow in recent years. The 75-year-old Mr Peltz has urged P&G, which has a market value of $235bn, to invest in smaller, fresher products to appeal to young consumers who are viewed as being less loyal to big brands.
Both sides had spent the past few months arguing their case, with Mr Taylor defending his record since taking over as chief executive in November 2015. Trian poured $25m into the fight, while P&G hired a host of blue-chip advisers — Goldman Sachs, Morgan Stanley, Lazard and Centerview Partners — to defend the board, and spent at least $100m, according to people familiar with the matter.
Mr Peltz had previously told CNBC that the board seat battle was “the dumbest thing I’ve ever been involved with”, while one shareholder on Tuesday complained to Mr Taylor about the extensive advertising for the proxy fight. Noting she had received no fewer than four notices in the mail about the vote, she asked: “Was this really necessary? Why did we spend $100m on this?”
Mr Peltz has called on P&G to simplify its business structure by cutting its number of units from 10 to three. He also wanted it to make more external appointments, as the company has a history of promoting from within, and its workers are often referred to as “Proctoids” for their adherence to a rigid corporate culture.
Mr Taylor, a P&G veteran, has made a point of acknowledging the company needs to change. However, he insists that management can reignite sales and change its culture without breaking up the company. He has pledged to cut $10bn in annual costs by 2021 and shed more than half of P&G’s brands.