An Epic, and Costly, Boardroom Battle at Procter & Gamble

 In Business

It is a referendum on the leadership of a $235 billion company as its stock has languished, underperforming its peers in the last decade. The outcome could affect the future course of the 180-year-old corporation, which has more than $65 billion in annual revenue and is home to familiar household brands like Tide and Pampers.

The proxy war is also a warning shot to blue-chip companies across the country that activist investors are setting their sights on ever-bigger corporate targets as they agitate for changes in strategy and structure. This year, General Motors and Tiffany & Company found themselves targeted by activists.

“No company is off limits because of its size, industry, the complexity of its business or even its stock price performance,” as activist investors control larger sums of assets, said Damien Park, a managing director at Spotlight Advisors, which advises companies and investors on activism.


Nelson Peltz of Trian Fund Management wants a seat on the Procter & Gamble board so he can try to persuade it to revamp the company.

Patrick T. Fallon/Bloomberg

Indeed, in recent years, through his investment firm Trian Fund Management, Mr. Peltz, 75, has taken significant stakes in H. J. Heinz, Mondelez International and DuPont. Sometimes, but not always, he has been given representation on the board.

This time around, Procter & Gamble is fighting Mr. Peltz’s attempt to get a seat, saying he is a late arrival to a corporate turnaround that is already underway.

Mr. Peltz, who owns a $3.5 billion stake in Procter & Gamble, has said he is not looking to oust any board members or the chief executive, David Taylor. If he wins a seat, he hopes to convince the other directors, including Kenneth Chenault, the chief executive of American Express, and Meg Whitman, the chief executive of Hewlett-Packard Enterprise, that the company should be organized from its current multilevel “matrix” structure to three clear global business units to improve accountability. He also contends that a study should be conducted to understand why Procter & Gamble’s once-vaunted innovation machine appears to have stalled.

“This is different from the normal activist slate, which is seeking to replace much of the board or the C.E.O.,’’ said Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “Here, he’s simply seeking input into the board process. He seeks a change of direction and I think he’s right. I think the company has stalled.”

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