Tuesday, October 10, 2017

Proctor and Gamble apparently stops Peltz

The attempt by Nelson Peltz to be elected to the Board of P&G appears to have been narrowly defeated.  It was a poor decision by P&G to try and block him, and they spent millions of dollars of shareholder money doing so.  Peltz is surely an activist investor, but he was not pushing to break the company up or do something radical at the moment.  What he wanted was more aggressive management and to run the company as three separate but joined units.  It was a reasonable goal.

P&G is a conservative company in a conservative town.  It has been immensely successful but whether it is being run in an efficient manner is open to question.  Companies have personalities and they change slowly if at all.  When calling on P&G in the mid-80's, they treated me as a leper since the bank that I worked for was going through a challenging time.  They had agreed to see me but this arrogant treasurer proceeded to lecture me in a hostile manner about my company, as he was concerned about bonds that they owned.  My role as a contact for equity investors was ignored, so I eventually stood up and thanked him for his time after briefly disagreeing with his all encompassing trashing of my company.  I walked out, the only time that was ever done when visiting a company.

P&G likely needs Peltz as their insularity is a company tradition.  Certainly they are frightened that Peltz may be right and that running the company as three units could lead to an eventual break up of the company into three free standing businesses through spin-offs.  That could be beneficial to shareholders, but also to employees who would be judged and rewarded based on their more discreet company's results.

This is not over.  Look at how defeating Peltz eventually worked out for DuPont.


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