Consumer Products

Has Peltz Beaten P&G and Gained Board Seat?

On October 9, shareholders of Procter & Gamble Co. (NYSE: PG) cast their ballots for all 11 seats on the company’s board of directors. On October 10, P&G declared victory, announcing that all 11 of its candidates had been elected. Activist investor Nelson Peltz was not among the chosen.

Until November 15. The company that counted 2.6 billion proxies said that their new preliminary tally indicated that Peltz won a seat by a razor-thin 43,000 shares. P&G said the new results remain preliminary and are subject to a review and a challenge period.

Peltz urged P&G to accept his election and not waste any more of shareholders’ money fending him off. Just ahead of the October vote. Peltz called the $100 million proxy battle with P&G “probably the dumbest thing I ever did.”

Peltz and his hedge fund, Trian Fund Management, hold a $3.5 billion stake in P&G, about 1.5% at last night’s closing price. Peltz launched the proxy fight in July and in September published a white paper outlining his reasons for seeking a seat on P&G’s board. According to Peltz and Trian, the biggest challenge facing P&G is market share loss, both compared to traditional peers and to smaller competitors in the consumer products sector.

P&G disagreed. The company called Peltz’s view “very outdated and misinformed” and claimed the white paper brings up “nothing substantive” and ignores the progress the company has made recently.

Peltz has said he has no desire to replace the CEO, but he does want to make major changes, like trimming the company’s 10 businesses to just three and moving ahead more quickly with management’s $12 billion to $13 productivity plan.

Maybe P&G would be better off letting Peltz take his seat on the board. When he lost a proxy fight with DuPont management two years ago, the CEO was replaced within months.

P&G’s stock rose by as much as 3% in Wednesday’s after-hours trading and traded up nearly 2% in Thursday’s premarket at $90.00, in a 52-week range of $81.18 to $94.67. The 12-month consensus price target on the stock is $92.32.

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