Forum Home Page [see Broadridge note below]

 The Shareholder ForumTM`

Fair Investor Access

See related case examples of

Dell Inc.

appraisal rights for intrinsic value realization

and

Walgreen Co.

stock buyback policies

"Fair Access" Home Page

"Fair Access" Program Reference

For graphs of specific company and related industry returns, see

Returns on Corporate Capital

For graphs of specific company voting for the past 5 years, see

Shareholder Support Rankings

 

 

 

Forum distribution:

Proxy advisor reaction to professional defense playbook "obfuscation"

 

Source: Financial Times, April 27, 2015 article

ft.com > companies > industrials >

Chemicals


 

April 27, 2015 5:50 pm

Investor advisory group backs Peltz for DuPont board

Stephen Foley in New York


Ellen Kullman, DuPont chief executive

©Bloomberg

Nelson Peltz, the activist investor, won the backing of an influential shareholder advisory group in his battle for a seat on the board of US chemicals company DuPont.

Mr Peltz’s presence on the board may be “not simply desirable but necessary”, the proxy adviser ISS said, in a scathing critique of DuPont’s communications with shareholders.

The existing board and management at DuPont are “more inclined to obfuscation than accountability” and used “sleight of hand” to flatter the company’s competitive strength, it said in a report sent to clients on Monday.

The proxy adviser’s intervention has the ability to sway scores of institutional investor votes, in what is shaping up to be the most contentious fight of this year’s season of annual shareholder meetings in the US.

Mr Peltz’s investment company Trian Partners has built a 2.7 per cent stake in DuPont and is arguing that the company has fallen behind its peers in terms of revenue growth and margins. Its prescription for change includes big head office cost cuts and consideration of whether the company should break itself up.

DuPont’s management, led by chief executive Ellen Kullman, says Mr Peltz’s presence on the board would be disruptive, and Trian’s plan would slash vital research and development spending.

ISS endorsed Mr Peltz and one of the three other director nominees being put forward by Trian.

“This is not a broken company, but there is compelling evidence that the dissidents are on to something in their critique,” ISS analyst Chris Cernich wrote. “Operating efficiency is not what it should be, yet instead of addressing the core issues, the board and management, at least in their communications with shareholders, are more inclined to obfuscation than accountability.”

ISS and other proxy advisers can swing more than a quarter of the votes at some shareholder meetings, although 30 per cent of DuPont’s shares are held by retail investors who do not receive their recommendations. DuPont has already been seeking to limit ISS’s influence by arguing the adviser is too close to activist hedge funds such as Trian.

DuPont said ISS had ignored “the success of our transformative strategy and the value-destructive nature of Trian’s break up agenda ... the addition of Trian’s nominees would remove critical experience from DuPont’s board.”

Trian did not immediately respond to ISS’s conclusions.

With pressure from Trian mounting, DuPont in January said it was accelerating its own cost-cutting plans, which had been aimed at delivering a reduction of $1bn per year by 2019, but are now intended to save that much this year.

Trian nominated four directors to the board in January. ISS supported Mr Peltz and John Myers, a former chief executive of GE Asset Management, but not Arthur Winkleblack, a former Heinz executive, or Robert Zatta, who runs speciality chemicals group Rockwood Holdings.

The DuPont annual meeting is on May 13.

 

© The Financial Times Ltd 2015

 

 

 

This Forum program is open, free of charge, to anyone concerned with investor interests in the development of marketplace standards for expanded access to information for securities valuation and shareholder voting decisions. As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

This Forum program was initiated to address issues and objectives defined by participants in the 2010 "E-Meetings" program relevant to broad public interests in marketplace practices, rather than investor decisions relating to only a single company. The Forum may therefore invite program support of several companies that can provide both expertise and examples of leadership relating to the issues being addressed.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to access@shareholderforum.com.

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.