Investor Nelson Peltz plans to launch a fight for a board seat at Procter & Gamble Co., in an effort to jolt the consumer-products giant whose sales and profit growth stalled, according to people familiar with the matter.
See Breakingviews column:Trian, which owns about $3.3 billion of P&G's stock, or 1.5 percent of the company, has until an October annual meeting to convince fellow shareholders that Peltz deserves to be voted onto the board.
In what it said was a bid to show it would be a collegiate player, Trian insisted Mr Peltz's first move if he is elected would be to recommend the re-election of the director who lost their seat. Peltz's fund has also invested in PepsiCo - a stake that it said past year it no longer held - as well as Wendy's, Mondelez International and General Electric. The firm's campaign website (revitalizepg.com) and press release has few immediate changes proposed for the company other than advocating for a geographic organizational structure that it believes will empower divisional leaders to make faster and better decisions.Shares of P&G were up slightly at $87.72 in afternoon trade.
The company, which is based in Cincinnati and whose brands include Gillette, Tide and Pampers, is struggling to navigate changing consumer habits. Company lifer David Taylor, who became CEO two years ago, drummed up some new costs to cut, but analysts appear underwhelmed by P&G's focus on "irresistibly superior" products. Shares of rival Johnson & Johnson are up 15 percent in the same period, Colgate-Palmolive Co.is up 11 percent and Kimberly-Clark Corp.is up 9 percent.
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Trian Fund Management LP doesn't wage proxy fights often, but when it does, it goes big. P&G's quarterly organic sales, which excludes acquisitions and divestitures, has fallen just once during his one and half years at the helm. Trian contended that Procter & Gamble needed to cut costs and trim its bureaucracy. "They start to lose market share", Peltz tells CNBC.
P&G shares have underperformed the S&P 500 and the consumer-staples group for the past 10 years. "I like the man".
"As one of P&G's largest shareholders, and given P&G's disappointing results over the past decade, Trian has a keen interest in helping the Company address the challenges it is facing", the filing said. P&G rejected naming Mr. Peltz to the board and said in a statement it "is confident that the changes being made are producing results".
Trian says that Peltz will nominate the director that he replaces, which would expand the Board to a new total of 12 members.