Procter & Gamble targeted by Peltz proxy fight

Ivan Schwartz
July 17, 2017

Procter & Gamble Co (NYSE:PG) is in an proxy fight with activist investor Trian Fund Management.

Can Trian Fund Management really fix what ails Procter & Gamble (PG)?

Trian is seeking one seat (out of 12) - for Peltz - on P&G's board at the company's annual stockholders' meeting tentatively on the calendar for October.

Calling P&G's financial results over the last decade "disappointing", Trian cited weak shareholder returns, deteriorating market share and excessive cost and bureaucracy in the Securities and Exchange Commission filing that announced the challenge. Trian will compensate Daley, who spent 35 years at the company before retiring in 2009, with a total of $250,000 to his family's charitable foundation. We believe P&G needs to address the factors contributing to this consistent underperformance.

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Also, insider Ashley Bacon sold 6,514 shares of J P Morgan Chase & Co stock in a transaction that occurred on Thursday, May 11th. Northwest Quadrant Wealth Management LLC acquired a new stake in J P Morgan Chase & Co during the fourth quarter worth $125,000.

The firm, which initially revealed its position in February, now holds 37.6 million P&G shares, or about 1.5 percent.

"P&G's Board and management team are keenly focused on executing the company's strategy to drive innovation, accelerate organic sales and volume growth, improve productivity and cost structure, and strengthen P&G's organization and culture", the company said in a formal statement. Nor was it seeking to replace the company's chief executive of less than two years, David S. Taylor.

P&G's shares have underperformed peers such as Colgate-Palmolive and Johnson & Johnson, as well as the broader S&P 500 index, in the past decade.

This move comes after Peltz was denied a seat on the Board last week. A $10 billion cost-cutting plan begun in 2012 has had no effect on earnings or sales growth, according to the firm. Meanwhile, the company is losing market share in various categories yet it's the only company in the world that boasts over 20 billion-dollar brands.

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