Trian will seek a seat for Peltz at P&G’s annual shareholder meeting, according to a proxy filing yesterday with the Securities and Exchange Commission. The firm, which initially revealed its position in February, now holds 37.6mn P&G shares. It’s not seeking a breakup of the company or a new chief executive officer, according to the filing.
“Structural and organisational bureaucracy may be preventing management from identifying and responding to commercial opportunities in a timely manner, hindering product innovation and dampening sales growth,” Trian said in the filing.
P&G CEO David Taylor is struggling to reignite sales growth at the maker of Tide laundry detergent and Pampers diapers as it faces assaults from cheaper rival brands and retailers that are keeping a tighter rein on inventory to defend themselves from online competition. P&G shares are showing a 5.1% total return for shareholders since the start of the year, trailing gains of 29% for Unilever in local currency terms, and 12% for Colgate-Palmolive Co, according to Bloomberg data.
Consumer companies are becoming increasingly attractive to activists. Dan Loeb’s Third Point disclosed last month that it had amassed a $3.5bn stake in Nestle, encouraging the company to sell its stake in cosmetics maker L’Oreal and increase leverage for share buybacks. Peltz’s fund has also invested in Pepsico — a stake that last year it said it no longer held — as well as Wendy’s Co, Mondelez International and General Electric Co.
Earlier this year, Unilever, which owns the Ben & Jerry’s ice cream and Dove personal-care brands, fended off an unwanted takeover approach from Kraft Heinz Co, prompting the Anglo-Dutch giant to say it would take steps to improve shareholder returns.
Some of Peltz’s previous campaigns with US corporate giants have yielded results. Jeffrey Immelt said last month that he would step down as chairman and CEO of GE after Trian criticised what it described as the conglomerate’s under-performance. One of Trian’s most recent high-profile campaigns was at DuPont Co, where the fund argued as early as 2013 that the company should be broken up to realise shareholder value. The company later announced a $60bn merger with Dow Chemical Co.
Trian, which manages $10bn, said it had held meetings with P&G management and board members over the past four months, in which its proposal to name Peltz as a director were rebuffed. Trian’s plans were reported earlier by the Wall Street Journal.
It’s not the first time P&G has been targeted for a shakeup. In 2012, Bill Ackman’s Pershing Square Capital Management disclosed a $1.8bn stake in the company and pushed to replace then-CEO Bob McDonald, who was ultimately replaced the following year.
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. A $10bn cost-cutting plan begun in 2012 has had no effect on earnings or sales growth, according to the firm.
“Disruptive and existential threats are impacting the entire consumer packaged goods industry,” Trian wrote. “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.”