Procter & Gamble

[Guest]

Today, shareholders will punch their votes to determine if Trian Fund manager Nelson Peltz wins a seat on P&G’s board. It’s the largest proxy vote ever and could decide the direction of the 180-year-old consumer goods powerhouse. 

Ever since Peltz bought a 1.5% stake in P&G (-0.21%) two years ago, his Pampers haven’t been sitting right. Shares are up just 3.4% YoY compared to the S&P’s 17.6% return and P&G’s staple brands are losing steam (demand for Gillette is down 18% this year). 

But Peltz believes he can get those diapers fitting snug again by steering P&G towards smaller, niche brands for millennials. P&G, on the other hand, stands by its bread-and-butter products (like Tide and Crest) that sent it to the top.

These proxy battles might not get election coverage…

…but they have all the drama of a political campaign. Both Trian and P&G have cold-called shareholders, exchanged nasty remarks, paid for social media ads, kissed babies—and get this: spent $60 million each leading up to today’s vote.

But unlike some activists, Peltz isn’t looking to overthrow the board or oust its CEO (something Marcato Capital did with BWW earlier this year). He just wants a leaner long-term strategy. 

Here’s Peltz’s 94-page proposal in plain English:

• Restructure P&G’s business into three autonomous units: Beauty, Homecare, and Family Care.
• Hire outside talent: P&G’s history of rewarding tenure and developing in-house talent has led to a lack of innovation, perspective, and expertise. Peltz suggests hiring 25 of the top 100 executives from outside the company.
• Acquire more niche brands: similar to what Unilever did with Dollar Shave Club ($1 billion) or what Nestle did with Blue Bottle coffee ($425 million).

But P&G has a different perspective. It believes Peltz is working with outdated information, AND he doesn’t fit the company’s “criteria” to hold an active board seat. We’ll find out the results later, but according to the NYT, it looks like Peltz has the edge…

[Guest]

UPDATE:  P&G (-0.54%) shareholders voted down Nelson Peltz’s bid for a board seat, though he hasn’t conceded.

[admin]

Gillette introduced a new line of lower-end razors.