On Sept. 6, Trian Partners outlined its proposals for reviving growth at Procter & Gamble as part of its proxy fight to win a board seat for its chief executive, Nelson Peltz. Valued at $232 billion, P&G would be the biggest USA company by market capitalization to face a proxy fight.
“It remains clear Trian has an outdated view of our company”, P&G said in a statement. The company is now comprised of four global business units.
Trian Partners is P&G’s fifth-largest shareholder.
Nevertheless, the company said it would review the white paper “in more detail”.
P&G says that the company is confident it has the right plan, the right structure, and the right board in place to continue its successful transformation and deliver results and shareholder value.
After first revealing a stake in P&G in February, Trian said in July it would seek a seat on the board for Peltz. The company should also examine why it has failed to innovate after failing “to create a new meaningful brand in almost 20 years”. Plans for revitalizing the company break down into eight key areas, and include reorganizing P&G into three global business units, increase innovation, bringing in outside talent and using bolt on acquisitions to bring in small and local brands. The previous day, former Chief Executive Officer John Pepper emerged from retirement to oppose Peltz’s bid, warning it risks “putting a serious brake on our momentum” and setting the company on the wrong course. P&G, which has been cutting costs and selling off brands, reported net sales last quarter that were flat at $16.08 billion.
Under the new organization, the CEO would oversee the three business leaders.
According to Trian, P&G’s management compensation plan is tied to three-year goals that are too low, including a 2.8 percent organic sales target, which is lower than the company’s 3 percent to 3.5 percent market growth target.
He has previously criticised the “suffocating bureaucracy” of the firm and complained about its stock price.
Shares are up 10 percent year to date, but they lag the gains of the S&P 500 index over the past five years: 38 percent to 75 percent.