Trian Fund Management seeks to seat Nelson Peltz on P&G board

Sandy Mccarthy
July 17, 2017

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the us print edition of The Wall Street Journal (July 17, 2017).

Mr. Peltz's Trian Partners, which owns a $3.3 billion stake, is taking a more surgical approach to the $223 billion company - whose brands include razors and detergent - than it did with its last proxy fight at DuPont, lobbying for a single board seat.

WCPO Insiders will learn what the looming proxy fight could mean for P&G. After a series of additional meetings, P&G declined the request, prompting Peltz to seek shareholder support at the company's annual meeting in October.

The filing sets up a proxy fight in which shareholders will be asked to decide whether to add Peltz as a 12 board member, representing Trian Partners, a NY fund that owns more than $3 billion in P&G shares. It is expected to disclose the campaign Monday, they added.

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The battle has spilled out into public after months of talks. The company also said that its board was "confident that the changes being made are producing results, and expresses complete support for the company's strategy, plans, and management".

However, it has suffered in recent years from the slowdown in the global economy as well as from competition from startups. The consensus price target on the stock is $91.59. They have returned about 4% to investors over the past 12 months, including dividends, compared with a 16% return for the S&P 500. It isn't seeking a breakup as some analysts have speculated since the investment was disclosed in February.

If Peltz were elected to the board, the first order of business would be to propose that the board increase the number of directors by one and reappoint the board member who wasn't re-elected, Trian said in the filing.

"We need a game-changing attitude at P&G", Mr. Peltz said in an interview. The company has already shed some of the smaller brands it says collectively contribute little to its operating profit. Currency exchange rates have diluted the impact of the $10 billion in cost cuts P&G delivered over the past five years, and now it seems fair "to question the benefit of re-investing those savings, particularly as sales and earnings growth have only decelerated over this time frame, according to Lieberman". P&G's quarterly organic sales, which excludes acquisitions and divestitures, has fallen just once during his one and half years at the helm. Worth $222 billion, P&G is the largest company to ever face such a campaign.

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