DuPont Co. won the backing of investor advisory group Proxy Mosaic, the first signal the chemical maker may have an edge in next month’s showdown with activist investor Trian Fund Management.
In the first of four expected opinions from advisory firms to institutional investors, Proxy Mosaic recommended shareholders support the Wilmington, Delaware-based company’s incumbent directors.
“DuPont’s board is one of the few areas of the company that isn’t broken, and it is unclear how the rest of the dissident’s underwhelming candidates will add any value,” the New York-based advisory firm said in a report Thursday.
Larger proxy advisers Institutional Shareholder Services Inc., Glass Lewis & Co., and Egan-Jones Ratings Co. are expected to issue recommendations in the coming weeks. The opinions aim to influence the vote of fund managers and other shareholders in the increasingly acrimonious battle between Trian and the 212-year-old chemical maker.
Trian co-founder Nelson Peltz is running himself and three others for board seats at DuPont’s May 13 shareholders meeting, saying the company has excessive corporate expenses and should be broken up. Chairman and Chief Executive Officer Ellen Kullman has fought back, arguing integration is key to DuPont’s success and dismantling DuPont would be costly and high-risk.
“While the dissident is long on criticism of the company’s financial performance, it is short on plans for a turnaround,” according to Proxy Mosaic, which is run by Brittany Wedereit, a former Glass Lewis vice president.
Kullman is cutting $1 billion in costs this year and buying back shares to help boost earnings. She plans to spin off DuPont’s performance chemicals business -- maker of pigments, refrigerants and Teflon non-stick coatings -- as a new company called Chemours on July 1.
Trian wants to go further, advocating the separation of DuPont’s faster-growing agriculture and nutrition businesses from more cyclical units such as safety and protection, which makes Kevlar anti-ballistic fiber and Nomex heat-resistant fabric used by firefighters.
DuPont had offered to settle the proxy fight by giving Trian nominee John H. Myers a seat, but those talks ended when Peltz insisted that the seat go to him.
“Trian is typically one of the more ‘constructivist’ activist shareholders, but Nelson Peltz’s refusal to countenance any compromise that does not involve him personally serving on the company’s board has made this proxy contest virtually inevitable,” Proxy Mosaic said in the report.