Many Procter & Gamble shareholders may be breathing a sigh of relief as ‘activist investor’ Nelson Peltz was not elected onto the company’s Executive Board today. This means P&G will continue to be in full control of decision making moving forward, making it a huge win for the consumer goods giant.
"P&G's Board and management team thank P&G shareholders for their support, input, and participation throughout the proxy contest," said P&G in a statement. "We are encouraged that shareholders recognize P&G is a profoundly different, much stronger, more profitable company than just a few years ago."
Even though P&G won the battle, the war may not be over. For one, Peltz’s hedge fund, Trian Fund Management, says the proxy vote is still too close to call. Additionally, with Trian being the sixth largest holder of P&G stock shares, Peltz may have a residual influence on decisions of the company moving forward.
“This is a big fight. We fought one of the biggest companies in the world. I am proud at how we behaved no matter how it turns out,” said Peltz right after the announcement that he was not voted onto the Board. He continued to state he doesn’t think the fight is over, and that he will continue to fight for a seat.
“I don’t think they have a structure that is right for their business and they will continue to miss,” said Peltz. “I don't think they're serving their shareholders properly.” He referred to the culture and structure at P&G as a “suffocating bureaucracy.”
On the other hand, P&G says it’s moving forward with a positive transformation. CEO David Taylor said P&G is pretty far into their transformation, but he understands shareholders’ concerns: “Certainly there's a desire to see us move faster. And I take the feedback from all investors. And I know from talking to many investors that they support the [current] strategy.” He went on to make it clear that they are open to new ideas to better the company in the future.
The Simply Money Point
As a large P&G shareholder, Nelson Peltz will continue to have a strong voice and share his ideas openly. Many will watch to see how this decision will impact the future of the company and the Cincinnati area. The hope is it will yield positive change and innovation for every employee and shareholder.
But also keep this in mind: On average, just 12% of stock of the average blue chip company (which is a company that is well established and been around for a long time) is owned by individual investors, like you. In P&G’s case, that number jumps to 40%. This means you, the individual investor, were probably the one to seal Nelson Peltz’s fate today. But the clock is ticking. If shareholders continue to see P&G’s stock value stall, call for change will grow louder. And yes, that means another proxy fight for a seat on its Executive Board could be in P&G’s future.