P&G claims narrow win in proxy challenge

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NEW YORK: Procter & Gamble claimed victory Tuesday in a closely-watched boardroom battle over the future of the consumer products giant following an investor vote, but its activist fund rival refused to concede defeat.

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P&G chief executive David Taylor announced at the annual meeting that preliminary results showed the company’s entire slate of candidates to the board of directors had been elected, meaning that shareholders rejected Nelson Peltz, head of Trian Fund Management.

The outcome is “considered preliminary until final results are tabulated and certified by the independent Inspector of Elections,” P&G said.

P&G, which makes Old Spice deodorant and Pampers diapers, is the largest company by market capitalization to face a proxy battle, in which a firm is pitted against a rebel shareholder or group.

Taylor, speaking at a news conference after the vote, said he was “certainly happy” with the outcome and pledged to continue to work with Peltz, whose firm holds 1.5 percent of P&G shares.

“It’s a proxy contest about ideas. I told Nelson we would continue to listen to him,” Taylor said. “We are open to ideas wherever they come from.”

But Trian, citing the closeness of the vote, did not concede defeat.

“According to our proxy solicitors, today’s vote is too close to call and it will take more time to determine the outcome,” Trian said. “We await the certified election results by the independent inspector of election.”

Peltz, addressing the annual meeting before the tally was announced, implored management to chart a course of “bold change” no matter the outcome. He said a “suffocating bureaucracy” was hindering results.

During the months-long contest, Peltz had argued that P&G was too insular and needed an outside voice on its board to rouse innovation and open its eyes to opportunities in a fast-changing retail environment.
Peltz pointed to sluggish sales and the declining market share of many key products.

But P&G defended its record, citing some improving sales data and describing Peltz’s efforts as a threat to ongoing improvements. The company has sold secondary brands and invested heavily in marketing around social media and other types of ascendant advertising.

Taylor and others also questioned Peltz’s knowledge of P&G’s product categories and his long-term commitment to the company.

But Peltz’ arguments clearly resonated with some shareholders, who expressed disappointment at the company’s sluggish pace of introducing new products and were critical of overall performance.

Another investor expressed irritation at receiving myriad phone calls and mail solicitations about the proxy vote itself. The two sides estimated they together spent $65 million on the campaign.

Taylor conceded some missteps, as with the company’s failure to more quickly read a shift in the Chinese market to more premium products, such as diapers. But he said the company was on the right track.

“There is clear evidence we’re making progress,” Taylor said. “I share the sentiment that we have to do more to move faster.”

Taylor also defended the communications with shareholders, saying the intent was to “make sure you were informed, understood our point of view.”

Shares in P&G finished down 0.5 percent on Tuesday at $91.62.

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