P&G’s fight against Peltz leaves investors polarised

Bloomberg

Procter & Gamble Co. may have prevailed in its proxy fight against activist investor Nelson Peltz, but the contentious showdown has left its investors as divided as ever. The world’s largest consumer-products company said that Peltz fell short of the votes needed to be elected to the board, based on preliminary results. But the investor isn’t going quietly: His firm, Trian Fund Management, said the decision was too close to call and that it’s waiting for certification by an independent inspector.
Peltz argued that P&G suffered from a bloated structure and a lack of new brands favored by younger shoppers. While he hasn’t called for the replacement of Chief Executive Officer David Taylor or a breakup of the company, the 75-year-old did suggest reorganising the maker of Tide and Pampers into three largely autonomous units.
Many investors agreed with Peltz’s message. And regardless of how they voted, the process threw a spotlight on a broader dissatisfaction among shareholders, said Ali Dibadj, an analyst at Sanford C. Bernstein & Co. “They expect more from the company,” Dibadj said.
Taylor “has a bit of room to deliver on results, but he’s going to be in the spotlight and under the microscope in a very big way over the next several quarters.”
P&G shares closed down 0.5 percent to $91.62 in New York, the biggest one-day drop in about two weeks.
BlackRock Inc., which owns about 6 percent of the consumer-brands company, split its vote.
Two million shares were cast for the board’s proposal while the remainder were voted in favour of Trian’s, according to a person familiar with the matter. The firm owned about 156.4 million shares as of Oct. 6 but may not have voted all its outstanding shares, the person said.
Peltz said he believed the vote margin was plus or minus 1 percent, and the support he garnered from shareholders should be a sign to Taylor that he deserves a board seat. “Even if they win, which I’m not sure they did, think about what Pyrrhic victory it is,” he said in an interview on CNBC.
Over the years, P&G has struggled to churn out as many blockbuster products and overcome a culture of bureaucracy. But Peltz had an outdated view of the company, Taylor has repeatedly said. In a statement, P&G said it’s a “much stronger, more profitable company” than a few years ago.
Peltz bought a $3.5 billion stake in P&G earlier this year before embarking on the three-month board fight.