{"id":46935,"date":"2017-10-11T11:22:12","date_gmt":"2017-10-11T11:22:12","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=46935"},"modified":"2017-10-11T11:22:12","modified_gmt":"2017-10-11T11:22:12","slug":"peltzs-procter-gamble-defeat-could-be-more-humbling-than-harmful","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/peltzs-procter-gamble-defeat-could-be-more-humbling-than-harmful.html","title":{"rendered":"Peltz’s Procter & Gamble defeat could be more humbling than harmful"},"content":{"rendered":"

Peltz’s Procter & Gamble defeat could be more humbling than harmful<\/span><\/strong><\/span><\/h2>\n

Peltz’s Procter & Gamble defeat could be more humbling than harmful: Nelson Peltz put his activist hedge fund credentials on the line to win a board seat at Procter & Gamble Co, only to be narrowly defeated, according to a preliminary shareholder vote count. Yet he stands to lose more face than he does money.<\/span><\/p>\n

Peltz, CEO of Trian Fund Management, was also rebuffed in a battle for board seats, or proxy contest, at DuPont two years ago. But he went on to attract more money from investors and have a key ally installed as the chemical maker\u2019s new chief executive.<\/span><\/p>\n

Trian said on Tuesday that the shareholder vote at P&G, the biggest company to ever face a proxy contest, was too close to <\/span>call, and that it would wait for the result to be certified by an independent inspector. P&G says Peltz has lost.<\/span><\/p>\n

But if Peltz\u2019s defeat is confirmed, there is little evidence it would cost him with his investors, industry analysts and academics said.<\/span><\/p>\n

\u201cOverall, Nelson Peltz has a good record and he does work hard to improve companies,\u201d said University of Michigan professor Erik Gordon. \u201cHe will have no trouble finding companies where improvements need to be made and where he\u2019ll be let in the door.\u201d<\/span><\/p>\n

Trian\u2019s assets under management are at an all-time high of $14 billion, the result of long-standing confidence by pension funds and endowments in Trian\u2019s 12-year investment history. There was no sign on Tuesday of significant redemptions by Trian investors.<\/span><\/p>\n

Indeed, Trian got a boost this week from another big U.S. conglomerate, when General Electric Co offered a board seat to Trian chief investment officer Ed Garden, without any proxy contest.<\/span><\/p>\n

To be sure, Trian was eager for a win at P&G. Trian\u2019s 2.1 percent return through the end of September trails the average activist hedge fund\u2019s 4.8 percent gain this year. And it lags last year\u2019s 11 percent return.<\/span><\/p>\n

Trian prefers to work behind the scenes and has only waged three proxy contests since its founding in 2005. It now looks to have lost two of <\/span>them, and joins a small club of activist hedge funds that have experienced such defeat. They include Bill Ackman\u2019s Pershing Square Capital Management, Barry Rosenstein\u2019s Jana <\/span>Partners and Jeff Smith\u2019s Starboard Value.<\/span><\/p>\n

In the investment community, 75-year old Peltz, who speaks in calm tones and steers clear of the name-calling often heard in other contests, was thought to be the only activist who could take on P&G and its entrenched management.<\/span><\/p>\n

However, the 180-year-old company, which makes Tide detergent, Crest <\/span>toothpaste and Gillette razors, always presented a challenging target for Peltz because an unusually high 40 percent of P&G\u2019s stock is held by individual investors. They include P&G employees and retirees, who are traditionally loyal to the company\u2019s management.<\/span><\/p>\n

\u201cEven if they win, which I\u2018m not sure they did, think of what a pyrrhic victory it is,\u201d Peltz told CNBC on Tuesday. \u201cI mean everybody but the current employees voted for us up and down the line.\u201d<\/span><\/p>\n

P&G cannot afford to ignore Peltz even if victory has eluded him on this vote, said Charles Elson, a professor of corporate governance at the University of Delaware.<\/span><\/p>\n

\u201cIn many ways, this could echo what happened at DuPont, where within the year, the CEO was out and the things Trian called for were happening,\u201d he said.<\/span><\/p>\n

On Tuesday P&G\u2019s share price fell, closing down 0.5 percent, as investors worried whether the company would let up on its promises to pursue operational reforms.<\/span><\/p>\n

P&G has said that management is already working on several operational <\/span>changes, and that Peltz does not have the relevant experience to be helpful in the process.<\/span><\/p>\n

Investor pressure could still deliver change, industry insiders said.<\/span><\/p>\n

\u201cWinning the \u2018war\u2019 will be measured in the share price creation over time,\u201d said Bruce Goldfarb, founder of Okapi Partners, which <\/span>advises on proxy contests.<\/span><\/p>\n

Source:http:\/\/www.reuters.com\/article\/us-procter-gamble-trian-peltz\/peltzs-procter-gamble-defeat-could-be-more-humbling-than-harmful-idUSKBN1CF37M<\/span><\/p>\n

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