Proxy Music: P&G May Have to Dance With Peltz After All



It appears that the joyous corporate victory won by Procter & Gamble over Nelson Peltz last month may have sent champagne corks popping too soon.

Nelson Peltz’s Trian appears to have triumphed in a vote recount for board seat at Procter & Gamble in a setback for CEO David Taylor’s turnaround plan. Now the future strategy of the company may hang in the balance of a revised, razor-thin victory as a final vote recount in the expensive proxy fight shows the activist shareholder actually won a seat on P&G’s board of directors.

P&G has acknowledged that the recount shows Peltz actually won nearly 43,000 more votes than the P&G director he ran against. That would give Peltz a victory margin of 0.0016 percent—not, as P&G first said, a defeat by 0.2 percent of the vote.

Peltz, claiming victory, called on P&G to give him that board seat. But the company only would say that Peltz “is leading” and that the tally, still preliminary, remains subject to a challenge period.

The future direction of P&G hangs on the outcome, especially when it comes to how the company might innovate from here.

Peltz, whose Trian Fund Management has invested about $3.5 billion in the world’s biggest consumer products company, says P&G needs to streamline its businesses, nurture more new and small brands, and shake up management with outside talent. He’s also calling to break up the company to wrest more value for shareholders.

But P&G CEO David Taylor countered that the company already is in turnaround mode after shedding significant brands and entire businesses (like beauty) and cutting hundreds of millions of dollars in costs in an attempt to regain market share and profitability. He has maintained that the key to completing P&G’s recovery is to leverage established brands such as Tide and Crest. “It’s not the right time,” Taylor said before the vote about Peltz’s candidacy, “and he’s not the right person.”

It’s a contest that has been decked with superlatives from the start, with nearly 2 billion shares cast after a $60 million proxy battle that was the most expensive in history.