P&G CEO Blasts Billionaire Nelson Peltz as Tensions Mount Over Board Vote

  • Says the activist shareholder hasn’t been paying attention
  • Peltz is pushing for consumer products company to reorganize

David Taylor.

Photographer: Jason Alden/Bloomberg

After several meetings with billionaire Nelson Peltz, the chief executive officer of Procter & Gamble Co. came away convinced the activist shareholder isn’t interested in learning about the company he wants to remake.

David Taylor

Photographer: Jason Alden/Bloomberg

“He’s never asked virtually anything,” David Taylor said in an interview at P&G’s Cincinnati headquarters. “He hasn’t asked about strategy, people, what we’re doing.”

The CEO’s comments come in the midst of a proxy battle launched by Peltz’s Trian Fund Management to gain a seat on the board of the world’s largest consumer-products company. The fund owns about $3.4 billion of P&G’s stock. Shareholders will vote on Trian’s proposal at the annual meeting on Oct. 10.

For his part, Peltz said in an interview that he has found the talks amicable. He reiterated he was only seeking one board seat. “All I’m trying to do is engender good discussion,” he said.

Peltz, 75, is pushing for P&G to reorganize, contending it’s been slow to come up with innovative products and suffers from a bloated structure. 

Nelson Peltz

Photographer: Patrick T. Fallon/Bloomberg

Taylor, who is 59, rejected those criticisms, which he said are based on dated information, and called P&G a “profoundly different company” than it was a few years ago.

“We’ve certainly been willing to listen to him,” he said of Peltz. “What he hasn’t returned is a genuine interest to understand the transformation the company’s going through.”

Besides, he said, Peltz isn’t a good fit; the company is seeking diversity and directors with experience in health care, digital, fast innovation and developing markets -- strengths he said Peltz doesn’t have.

P&G shares were little changed at $90.81 at 9:51 a.m. Friday in New York. They had risen 8.1 percent this year through Thursday’s close, lagging behind the 12 percent gain in the S&P 500 Index.

Seeing Things Differently

Board member Patricia Woertz said Peltz’s experience as a director and investor at companies including H.J. Heinz, former chocolate and drinks giant Cadbury Schweppes and snackmaker Mondelez International Inc. aren’t relevant to the world P&G operates in.

“We see food differently,” said Woertz, former CEO of Archer-Daniels-Midland Co. “In fact, we got out of the food business several years ago as a result of seeing the differences.”

Peltz’s response is that there are more similarities than not between the food industry and the consumer packaged-goods sector because both rely on innovation, marketing and branding, and on understanding retailers and consumers.

He also noted that none of the current P&G directors had any experience in the consumer packaged goods business either.

P&G board member Frank Blake, former CEO of Home Depot Inc., said that Peltz would be joining in the middle of a turnaround that is already yielding results. “If this were at the very beginning and someone said, ‘I have a ton of ideas,’ that’s a different situation. We’re two years into this.”

White Paper

Trian released a 93-page white paper earlier this month calling for P&G to reorganize into three largely autonomous units: a beauty, grooming and health-care business; a fabric and home-care division; and one focused on baby, feminine and family-care products. Each unit would have regional leaders with full control over operations in their areas.

“They think that they’ve changed it,” he said of the P&G bureaucracy. Instead, “they’ve tweaked it a bit.”

P&G Bonus Program Pays Out Even When Results Miss Targets

Woertz, though, said the company has taken great strides in addressing bureaucratic issues since Taylor took over and has siloed about 70 percent of its businesses into 10 distinct categories with the sort of direct accountability Peltz has claimed the company lacks.

Peltz’s bid has received support from prominent shareholder advisory firm Glass Lewis & Co. and investor Yacktman Asset Management. This week, five former directors of Heinz also wrote a letter supporting his bid, saying “all Heinz stakeholders benefited” from Peltz’s presence on the company’s board.

But Taylor said he’s heard reservations about Peltz behind closed doors.

“Publicly, he can get people to say he’s a wonderful guy. Privately, none of them have called and said ‘David, you ought to put this guy on the board, he’d be great.’ ”

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