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P&G hits back at Peltz, says investor not entitled to board seat

Posted by: Admin | Posted on: August 1st, 2017 | 0 Comments

(Reuters) – Procter Gamble (PG.N) blasted Nelson Peltz’s efforts to join the consumer goods conglomerate’s board, saying the investor was not entitled to a seat and that he was being wrongly advised by people who were not in tune with the company’s operations.

PG’s salvo comes weeks after Peltz’s Trian Fund Management sought a board seat for the activist investor at the company, making PG the largest company ever to face a proxy battle.

In a statement to shareholders, the maker of Tide detergent and Gillette razors said Peltz offered no new “actionable ideas” that the company hadn’t already implemented.

“”Why not?” is not a compelling rationale to add Mr. Peltz to the PG Board. “Why not?” appears to be the extent of Mr. Peltz’s reason for board membership. This is simply not a sufficient standard,” Chief Executive David Taylor said.

“Joining PG’s board is not an entitlement.”

Peltz, whose hedge fund Trian has amassed an about 1.5 percent stake in the company, launched the proxy battle, after five months of negotiations with PG’s management failed to get him a board seat.

The investor, who is being advised by former PG CFO Clayton Daley, has been pushing the company to cut costs more efficiently as well as eliminate its “suffocating bureaucracy”.

In a proxy filing on Monday, Peltz said Trian’s analysis showed that a PG cost-cutting program launched in 2012, aimed at saving $10 billion over five years, had no discernible impact on profit or sales growth.

He also said PG’s move to meaningfully cut spending on digital advertising would inflict long-term damage to the company’s brands.

PG, the world’s biggest advertiser, retorted by saying that Peltz seemed “confused” with the company’s digital ad spending plan, which was aimed at avoiding fraud and waste in the online advertising marketplace.

The company said these efforts helped it save $100 million in ineffective spending.

PG also criticized Peltz for leaning on Daley, who was CFO of the company nearly a decade ago.

“This … appears to be compounding Trian’s fundamental misunderstanding of PG today and the operating environment the company faces,” Taylor said.

PG’s shares were up marginally in afternoon trading on Tuesday.

Reporting by Siddharth Cavale in Bengaluru; Editing by Saumyadeb Chakrabarty

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