'We need a game-changing attitude': Activist investors are demanding a seat on the board of consumer goods giant P&G


Downy softener and Tide laundry detergent, products distributed by Procter & Gamble, are pictured on sale at a Ralphs grocery store in Pasadena, California January 21, 2014.  REUTERS/Mario Anzuoni  Thomson
Reuters

Investor Nelson Peltz is planning to launch a bid for a board
seat at consumer goods giant Procter & Gamble (P&G),
people familiar with the matter have
told the Wall Street Journal
.

Peltz is allegedly hoping that winning a seat will allow him to
drive changes to help reverse P&G’s recent sluggish growth.
If the report is correct, P&G would be the biggest company
ever to face a proxy fight, (in which shareholders are persuaded
to gather enough shareholder proxies to win a corporate vote).

Peltz’s Trian Fund Management is a key shareholder in P&G,
with roughly $3.3 billion of stock. But he would need substantial
support from shareholders in order to win a vote at their annual
meeting, which will take place later this year.

“We need a game-changing attitude at P&G,” Peltz previously
told the WSJ. “We just can’t keep going along the same path.”

The news follows months of discussions about whether Peltz should
be made a director at P&G, a proposal that was ultimately
rejected, and squabbles over how to improve the company’s sales
and growth.

P&G manufactures and sells a wide range of consumer products,
owning hundreds of supermarket stalwarts like Gilette, Fairy, and
Oral-B.

However, it has suffered in recent years from the slowdown in the
global economy as well as from competition from startups. Its
share price has been volatile over the past five years, and in
2014 it sold between 90 and 100 of its brands to focus on between
70 and 80.

“The Board is confident that the changes being made are producing
results, and expresses complete support for the Company’s
strategy, plans, and management,” P&G said in a statement.

P&G has said changes introduced from late 2015
will save $10 billion
in annual expenses by 2021, and has cut
24,000 jobs since 2012. But reported earnings for 2016 were still

slightly lower
than for the previous year, and net sales for
2016 declined 8% compared to 2015.

P&G’s returns have also lagged behind S&P 500
companies, with investors seeing about 4% over the last year
compared to a 16% return for the S&P 500.

Trian has said that if it were to win a seat it would strive to
create an extra one and renominate the person who lost, to ensure
no existing members lose their positions. 

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