PELTZ CHANGING DIAPERS
Procter and Gamble Declares Victory
Procter & Gamble declared victory Tuesday over activist investor Nelson Peltz, saying initial figures show it won the biggest proxy battle in history. But the narrow win puts pressure on the owner of Bounty and Tide to move faster in its turnaround and regain support of investors. “The preliminary proxy results are ones I’m pleased with,” said CEO David Taylor on CNBC. “I know from talking to many investors, they support the strategy. Do they want to see us move faster – I’m sure – and we’re moving faster.”
“We will continue to respectfully engage with Nelson Peltz, whose input we value,” Taylor said. The two sides spent at least $60 million and crisscrossed the country to win shareholder support. But Mr. Peltz wasn’t admitting defeat and said he disagreed with P&G’s counting of the ballots. His Trian Fund Management said it would wait for the tally to be certified – which with as many as 2.5 billion shares to count and paper ballots to check, could take days or weeks.
Far from settling the challenge, the close vote promises to keep P&G on the spot to show its big brands can grow. Even if the company can keep Mr. Peltz out of the boardroom, P&G’s divided shareholder base will be attuned to any corporate slip-up or missed promise, while Mr. Taylor tries to address the bigger issues Mr. Peltz threw into focus – costs, hipper brands, and nimbler management. Mr. Peltz and Mr. Taylor shook hands after Tuesday’s meeting. Mr. Peltz congratulated the CEO. “We’ll talk,” Mr. Taylor said.
The bizarre outcome leaves unresolved whether Mr. Peltz will gain the board seat he sought in his effort to bring about change to a company whose share price has lagged that of its peers for a decade. But it is likely to continue the sometimes-acrimonious debate over the strategy of the huge household products company, whose brands include names like Tide, Pampers, and Gillette.
The circumstances also highlight the increased risks faced by blue-chip corporations as activists like Mr. Peltz control bigger pools of money. Procter & Gamble is the largest corporation ever to face a proxy battle. On Monday evening, General Electric, under pressure from its own investor base over its slumping stock price, announced it was giving a board seat to Trian.
Regarding the P&G proxy battle, Ali Dibadj, an analyst at Bernstein Research, said “I think the vote suggests shareholders are willing to trust David Taylor – for now.” He also added that the company would lose credibility with its shareholders and other if the turnaround didn’t materialize soon.
Keep those stops tight
Todd “Bubba” Horwitz
IN ASSOCIATION WITH