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P&G, Trian plan to spend a combined $60M on proxy battle

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P&G, Trian plan to spend a combined $60M on proxy battle

Whether or not Nelson Peltz's campaign for a seat on Procter & Gamble Co.'s board succeeds, it has already created a legacy: $60 million in spending on the proxy fight.

A filing made Aug. 1 with the SEC shows that Trian Fund Management LP, the activist hedge fund Peltz leads, plans to spend $25 million as it campaigns to add him to the board. Meanwhile, P&G said in a filing of its own that it has set aside $35 million to counter Trian's effort.

That money will go to a variety of recipients as Cincinnati-based P&G aims to keep Peltz out of its boardroom. Investors are expected to vote board candidates by the time the company convenes its annual meeting on Oct. 10.

In its filing, P&G said it has used about $2.5 million of that sum to hire D.F. King & Co., Inc. and Mackenzie Partners, Inc. Both firms consult investors and public companies on how to encourage shareholders to vote.

Trian said it plans to pay Innisfree M&A Incorporated "a fee not to exceed [$2 million] and reimbursement of out-of-pocket expenses" for similar services, according to its filing.

The fund has also agreed to pay up to $250,000 into a foundation managed by the family of former P&G CFO Clayton Daley, who is consulting the fund on its campaign. P&G has argued that hiring Daley, who has not held a position with the company since 2009, is hampering Trian's efforts.

As of Aug. 1, both P&G and Trian had spent only a fraction of their proxy solicitation budgets. P&G disclosed that about $950,000 of its $35 million "has been accrued to date," while Trian said it had racked up $650,000 in expenses.

That money will be spent over the next two months as each side attempts to win over shareholders. Peltz and Trian have pointed to P&G's shrinking market share in some categories, such as shaving products, as well as administrative costs as areas of the company that needs revision. Meanwhile, P&G has argued that Peltz and his fund have yet to present any significant changes to the company's strategy.

Broadly, consumer goods makers have been facing slowing sales in developed markets and the rising costs of raw materials in recent quarters, creating an attractive environment for investors to advocate new strategies. Swiss firm Nestlé SA is facing its own activist challenge from billionaire investor Dan Loeb, and Colgate-Palmolive Co. executives responded to analyst questions on a recent earnings call about what the company was doing to avoid a similar fight.