P&G CEO Blasts Nelson Peltz As Tensions Over Board Vote Mount
After several meetings with billionaire Nelson Peltz, the chief executive officer of Procter & Gamble came away convinced the activist shareholder isn’t interested in learning about the company he wants to remake.
“He’s never asked virtually anything,” David Taylor said in an interview at P&G’s Cincinnati headquarters. “He hasn’t asked about strategy, people, what we’re doing.”
The CEO’s comments come in the midst of a proxy battle launched by Peltz’s Trian Fund Management to gain a seat on the board of the world’s largest consumer-products company. The fund owns about $3.4 billion of P&G’s stock. Shareholders will vote on Trian’s proposal at the annual meeting on 10 October.
For his part, Peltz said in an interview that he has found the talks amicable. He reiterated he was only seeking one board seat. “All I’m trying to do is engender good discussion,” he said.
Peltz is pushing for P&G to reorganize, contending it’s been slow to come up with innovative products and suffers from a bloated structure.
Taylor rejected those criticisms, which he said are based on dated information, and called P&G a “profoundly different company” than it was a few years ago.
“We’ve certainly been willing to listen to him,” he said of Peltz. “What he hasn’t returned is a genuine interest to understand the transformation the company’s going through.”
Besides, he said, Peltz isn’t a good fit; the company is seeking diversity and directors with experience in healthcare, digital, fast innovation and developing markets - strengths he said Peltz doesn’t have.
Seeing Things Differently
Board member Patricia Woertz said Peltz’s experience as a director and investor at companies including H.J. Heinz, former chocolate and drinks giant Cadbury Schweppes and snackmaker Mondelez International aren’t relevant to the world P&G operates in.
“We see food differently,” said Woertz, former CEO of Archer Daniels Midland Co. “In fact, we got out of the food business several years ago as a result of seeing the differences.”
Peltz’s response is that there are more similarities than not between the food industry and the consumer packaged-goods sector because both rely on innovation, marketing and branding, and on understanding retailers and consumers.
He also noted that none of the current P&G directors had any experience in the consumer packaged goods business either.
P&G board member Frank Blake, former CEO of Home Depot Inc., said that Peltz would be joining in the middle of a turnaround that is already yielding results. “If this were at the very beginning and someone said, ‘I have a ton of ideas’ that’s a different situation. We’re two years into this.”
Trian released a 93-page white paper earlier this month calling for P&G to reorganise into three largely autonomous units: a beauty, grooming and health-care business; a fabric and home-care division; and one focused on baby, feminine and family-care products. Each unit would have regional leaders with full control over operations in their areas.
“They think that they’ve changed it,” he said of the P&G bureaucracy. Instead, “they’ve tweaked it a bit.”
Woertz, though, said the company has taken great strides in addressing bureaucratic issues since Taylor took over and has siloed about 70% of its businesses into 10 distinct categories with the sort of direct accountability Peltz has claimed the company lacks.
Peltz’s bid has received support from prominent shareholder advisory firm Glass Lewis & Co. and investor Yacktman Asset Management. This week, five former directors of Heinz also wrote a letter supporting his bid, saying “all Heinz stakeholders benefited” from Peltz’s presence on the company’s board.