Published: Mon, July 17, 2017
Economy | By Annette Adams

Peltz calls P&G a "suffocating bureaucracy"

Peltz calls P&G a

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.

The move, first reported by The Wall Street Journal Monday, makes P&G, with a market value of $222 billion, the largest company ever to face a proxy fight. P&G shares are showing a 5.1 percent total return for shareholders since the start of the year, trailing gains of 29 percent for Unilever in local currency terms, and 12 percent for Colgate-Palmolive, according to data compiled by Bloomberg. The Company's management acknowledges the need to reduce cost and bureaucracy, but it is clear to us that these critical issues have not been sufficiently addressed.

Those arguments didn't persuade P&G's board in private discussions.

SV&C's George Sard heads the TFM team, joined by Margaret Popper and Kelsy Markovich.

Procter & Gamble's board may still be smarting from its last nick with activism. "The board is confident that the changes being made are producing results, and expresses complete support for the company's strategy, plans, and management".

Mr. Peltz may not have all the answers to Procter & Gamble's troubles, but a fresh look on the board is warranted.

Those are among the details in an SEC filing Monday, in which the hedge fund founder seeks a seat on P&G's board.

In 2015, Trian ran a fight against DuPont.

The investment firm is seeking to add Nelson Peltz, its own CEO, to the company's Board of Directors.

In a statement, Peltz said he had identified further areas for cost savings of as much as $13 billion.

Shareholders are frustrated with the direction of this "very slow-moving" company, said Ali Dibadj, an analyst at Sanford C. Bernstein & Co., who has an outperform rating on the shares. Trian contended that Procter & Gamble needed to cut costs and trim its bureaucracy. It is not advocating for the break-up of P&G, the replacement of the CEO David S. Taylor, the replacement of any directors, taking on excessive leverage, cutting pension benefits, or suggesting that R&D, marketing, or capex be reduced.

-Sharon Terlep contributed to this article.

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