Proctor & Gamble Concedes Proxy Fight, Names Nelson Peltz To Board

Two months after narrowly losing a proxy vote that would have granted him a seat on Proctor & Gamble’s board, Trian’s Nelson Peltz has somehow managed to win a crucial battle in the largest and most expensive corporate proxy battle in modern history.

To wit, the consumer-products giant announced Friday that it would add Peltz to its board, according to the Wall Street Journal. The company said it would add Peltz to the board beginning March 1.

P&G’s stock, which has lagged the broader market this year, rose over the summer after Peltz started his proxy fight. Shares tumbled on Oct. 10, the day Peltz lost his proxy vote at the company’s annual shareholder meeting in Cincinnati.

Afterwards, Peltz revealed that he intended to challenge the results of the narrow vote in court.

Trian is disagreeing with the P&G and is to challenge the count...

 

“According to our proxy solicitors, today’s vote is too close to call and it will take more time to determine the outcome. We await the certified election results by the independent inspector of election. Trian is pleased with the support we have received from shareholders and all of the nation’s independent proxy advisory firms. We believe shareholders’ voices are being heard at P&G today, thanks to Trian’s involvement.

 

“With approximately $3.5 billion invested in P&G, Trian has a vested interest in the long-term success of the Company. If elected to the P&G Board, Nelson Peltz plans to start engaging collaboratively with his fellow directors. He has a long history of working collegially with boards and management teams and is looking forward to working closely with P&G’s leadership to revitalize P&G. Regardless of the final voting results, Trian believes management and the Board have been put on notice by shareholders – a continuation of the past decade’s underperformance is simply unacceptable. Trian is confident that P&G shareholders will hold the Board and management accountable and will be far less tolerant of lackluster performance going forward.

 

“Trian believes in P&G’s potential and wants to see the Company grow market share again and deliver long-term sustainable value for the benefit of all stakeholders. We feel strongly that a shareholder voice is needed in the boardroom and that Trian’s approach will help revitalize P&G."

On Friday, P&G revealed that a certified vote count showed the results of the vote were “extremely close” and because so many shareholders had voted for Peltz, the company apparently decided it would be easier to give him what he wants.

Peltz’s Trian Fund Management has invested about $3.5 billion in P&G. He then called on the company to end the dispute and appoint him to its 11-person board.

Per WSJ, Peltz’s pitch was that the company needed to streamline its businesses and consider bringing in outside talent. The company’s CEO, David Taylor, said Peltz would interrupt a turnaround plan he was in the middle of executing.

The two sides have battled publicly for months about the best structure and strategy for the world’s biggest consumer-products company. Mr. Peltz argued the company needs to streamline it businesses and bring in outside talent. P&G Chief Executive David Taylor countered that Mr. Peltz will disrupt a turnaround that is under way at the maker of Tide detergent and Gillette razors after a decade of market-share losses and stagnating profits.

 

“We have had constructive discussions with Nelson and we are committed to working together for the best interests of all P&G shareholders,” Mr. Taylor said in a news release. P&G said it and Mr. Peltz have agreed that it won’t take on excessive leverage, substantially reduce R&D spending or break up the company.

 

In addition, P&G said it would also add Novartis AG Chief Executive Joseph Jimenez to its board on March 1.

 

P&G is the biggest U.S. company by market value to face a proxy contest. The two sides spent at least $60 million and crisscrossed the country for weeks to win support from shareholders, from major index fund managers to thousands of P&G retirees. At the end of the campaign, the company’s shareholders were essentially evenly split.

P&G shares jumped in after-hours trade...