An activist investor that is looking to shake up American consumer goods giant Procter & Gamble has moved to put its chief executive on the board to influence what it sees as a much-needed turnaround.
Trian Fund Management, which owns roughly $3.3bn shares in the $225bn behemoth maker of Crest toothpaste and Gillette razors, has put Nelson Peltz up for election as a director at the upcoming annual shareholder meeting.
Mr Peltz said he had tried to get P&G to expand the board to enable him to join it without an election showdown but in spite of “numerous constructive meetings” he was rebuffed and will now contest a seat against the existing directors.
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.
Trian, which describes itself as one of P&G’s largest shareholders, said the Cincinatti-based consumer goods group had suffered “disappointing results over the past decade” and that it wanted to “help the company address the challenges it is facing”.
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. Trian also claimed the company’s market share had deteriorated as organic sales growth had decelerated and that it needed to take further action beyond selling off unprofitable brands.
What is an activist investor?
The activist is well known for seeking to break up companies it invests in to realise bigger returns for shareholders. However Trian said it was not looking to split up P&G.
It added it was not looking to replace the chief executive or increase debt.
The fund has also said that it has no desire to slash research and development or marketing spending, although it claimed P&G suffered from excessive costs and bureaucracy.
Trian's analysis found that P&G’s $10bn cost-cutting programme, which it launched in 2012, had had “no discernible impact on profits or sales growth” and it was not confident the additional $13bn in cost savings the group had found would lead to better performance.
Brooklyn native Mr Peltz has previously served on the boards of companies ranging from Heinz to investment manager Legg Mason.
He sits on four boards at present, including food giant Mondelez International and fast-food restaurant chain The Wendy’s Company. He said he would resign from at least one of the four directorships he holds if he joined the P&G board. The annual shareholder meeting is likely to take place in October.