November 16, 2017

P&G-Trian Battle: Peltz Wins Seat By 0.0016%

Here’s the intro from this “Cincinnati Business Courier” article (also see this WSJ article):

Procter & Gamble Co. apparently lost to activist investor Nelson Peltz in the biggest proxy battle ever over a board seat, according to results released Wednesday night by an independent firm. The Cincinnati-based maker of consumer goods such as Pampers diapers (NYSE: PG) had projected victory during the Oct. 10 annual meeting of shareholders at P&G’s downtown headquarters, so the official tally reported Nov. 15 by the outside firm is sure to shock some shareholders.

Peltz, who as CEO of Trian Fund Management oversees P&G stock worth $3.5 billion, had refused to concede the election, claiming the vote was too close to call. The margin of victory by the New York hedge fund apparently was tiny. Shareholders reportedly approved the candidacy of Peltz by 42,780 votes, or 0.0016 percent.

P&G could challenge the results. Both P&G and Trian are entitled to have their solicitors visually inspect the ballots cast by shareholders. That could take three to four weeks, which means a final result might not be disclosed until mid-December. P&G said it would respect the will of shareholders, but wants to ensure that every vote has been counted accurately. Peltz wasn’t available for comment, but his hedge fund recommended that P&G seat him now.

“Trian strongly urges P&G to accept the Inspector’s tabulation and not waste further time and shareholder money contesting the outcome of the annual meeting,” Trian stated Wednesday. “Shareholders have voted, and they have indicated that they want Nelson Peltz to join the board.” Procter & Gamble CEO David Taylor wasn’t available for comment, a spokesman said. “The results are still preliminary and are subject to a review and challenge period during which both parties will have the opportunity to review the results for any discrepancies,” the P&G spokesman noted in a statement. “P&G will disclose the final results after receiving the independent inspector of elections’ final certified report, which we expect in the weeks ahead.”

P&G based last month’s claim it had won on estimates provided by the company’s proxy solicitors, D.F. King & Co.and MacKenzie Partners. IVS Associates, a Delaware-based firm that specializes in independent tabulation and certification of voting results, shared the actual vote count with P&G and Trian after the stock market closed at 4 p.m. Nov. 15.

P&G said last month that Peltz had lost the election by less than 1 percent of the votes cast. A total of more than 2.6 billion shares were voted in the election, representing more than 75 percent of those entitled to vote, according to P&G. Peltz had campaigned for a board seat on the promise to boost the value of P&G stock through aggressive cost-cutting, and he advocated restructuring P&G as a holding company. P&G CEO David Taylor had argued that the Peltz approach would result in higher costs, lower efficiency, reduced profits and an added layer of management complexity P&G stock closed at $88.23 on Nov. 15, down less than 1 percent from the previous close of $88.87. The value of shares has ranged from $81.18 to an all-time high of $94.67 over the past 52 weeks.

Broc Romanek