Nelson Peltz with Trian Fund Management is moving full steam at getting a position on the board of Proctor and Gamble, headquartered in Cincinnati, OH (where I live). Meanwhile, according to the Cincinnati Business Courier, P&G is looking to spend up to $35M to fight Mr. Peltz. Trian is spending up to $25M to play offense with P&G shareholders.
Peltz argues that P&G has lost its innovative edge, not having had a unique new product developed since the Swiffer in 1999. P&G says that it has been innovative with new features of existing products, such as the Tide pods.
I believe Mr. Peltz may have a legitimate argument. P&G’s biggest splash in the last twenty years was when it acquired Gillette in 2005. It has a history of coming out with both new products and changes to existing products. This tradition may have, for various reasons, been lost along the way.
Nevertheless, I think this is the wrong way to bring about the desired changes. Trian owns over $3B in P&G stock. An individual or group should buy shares in a company because you like what the company is doing, not to fight them. If you do not like what P&G is doing, invest somewhere else. If P&G is doing a bad job, the loss of customers, markets, profits—and stock price—would be a better indicator that changes are needed than just having someone come in from the outside and stir things up. In addition, Peltz wants to restructure the entire company into a holding company with separate, independent subsidiaries.
IMO, this is nothing much more than manipulation, and P&G is having to spend time—and money—to play this game. Money on both sides could be better spent on fighting the competition instead of manufactured internal squabbles.