Procter & Gamble targeted by Peltz proxy fight


Billionaire investor Nelson Peltz disclosed Monday that he was seeking a board seat at Procter & Gamble, setting up one of the biggest showdowns between an activist shareholder and a corporate titan.

"The board is confident that the changes being made are producing results and expresses complete support for the company's strategy, plans and management", the company said in a statement to AFP.

Those are among the details in an SEC filing Monday, in which the hedge fund founder seeks a seat on P&G's board.

P&G has increased operating profit margins, to 20.6% previous year from 19.1% in 2011, and says it ranks third in the industry - behind competitors that also charge high premiums. The company is structured improperly as a "matrix organization" and needs help to better position itself for growth. The Trian Group believes that disruptive and existential threats are impacting the entire consumer packaged goods industry, including changes in technology and consumer behavior, and the Company must act with the greatest possible urgency to address the market share it is losing to both its peers and smaller local competitors, who are adapting to industry changes more effectively than P&G. In contrast, the S&P 500 Household Products index .splrcprod , which includes Kimberly-Clark Corp and Clorox Co, has risen 12 percent over the same period. Since it started in 2005, it has only had two prior proxy fights - with H.J. Heinz Co. and DuPont Co. - and there were almost 10 years between them. After a series of additional meetings, P&G declined the request, prompting Peltz to seek shareholder support at the company's annual meeting in October. "They start to lose market share", Peltz tells CNBC.

Trian owns about 37.6 million shares (approximately 1.4%) of P&G's outstanding stock, worth about $3.3 billion at Friday's closing price of $87.10 per share. "I like the man".

Trian said that it's not looking to break up P&G, replace Taylor or remove other board members.

P&G has said changes introduced from late 2015 will save $US10 billion in annual expenses by 2021, and has cut 24,000 jobs since 2012.

P&G, which reports quarterly results August 2, has shown slowing sales growth over the past five years and the company has lost market share across most of its categories, Trian said. In a bid to boost profits even as sales remain stagnant, P&G has sold unprofitable brands, including 41 beauty brands to Coty Inc, and focused on core brands.However, the efforts have failed to boost the stock much beyond the level where it traded at the beginning of this year.