P&G Climbs After Peltz Scores Surprise Board Victory in Recount


(Bloomberg) -- Consumer giant Procter & Gamble Co. climbed in early trading after Nelson Peltz’s bid for a board seat took a stunning turn, as an independent inspector said the billionaire investor actually won his proxy fight.

The official preliminary results showed that P&G shareholders have elected Peltz to the company’s board, his Trian Fund Management LP said in a statement Wednesday. The activist investor won by about 42,780 shares -- or a margin of about 0.0016 percent -- according to the results tallied by the independent inspector IVS Associates Inc., P&G said in a statement.

“Trian strongly urges P&G to accept the inspector’s tabulation and not waste further time and shareholder money contesting the outcome of the annual meeting,” Trian said.

P&G said the preliminary results from the inspector indicate Peltz won a seat on the board over former Mexican President Ernesto Zedillo. The company said the matter was yet to be resolved and that the inspector will release its final certified report in coming weeks.

“We knew it was close but at the end of the day we will respect the will of the shareholders as we always said we would,” P&G spokesman Damon Jones said, adding that the company has maintained a dialog with Peltz throughout the process.

The Cincinnati-based company’s shares rose 2.2 percent to $90.14 in trading before U.S. exchanges opened Thursday.

Bob Evans, RJR Nabisco

“It’s extremely rare. It’s very unusual,” said Alon Brav, a professor at Duke University’s Fuqua School of Business who specializes in shareholder activism. “Maybe this is the best outcome. He wasn’t going to go away. Now he’s going to take his seat. It was never clear to me why the company wouldn’t welcome him to the board.”

While it is unusual for an independent inspector to overturn the results of a shareholder vote, it isn’t without precedent. In 2014, activist fund Sandell Asset Management Corp. claimed to have won support for no less than five of its eight nominees for the board of Bob Evans Farms Inc. The official vote showed it had only garnered support for four.

In 1996, activist investor Carl Icahn and Bennett S. Lebow won a nonbinding shareholder vote at RJR Nabisco Holdings Corp., supporting the rapid spinoff of the company’s food business from its tobacco unit. The company had previously said it won, based on the preliminary results of the vote.

6.2 Million Votes

P&G was quick to declare victory last month, saying that Peltz had failed in his bid to win a seat on the company’s board after this year’s proxy fight. The company said at the time that the activist investor came within 6.2 million votes of being elected to the board based on its preliminary results, or less than 1 percent of the 2.54 billion shares outstanding. The results were based on early tallies from P&G’s proxy solicitor firms, DF King & Co. and MacKenzie Partners Inc.

Peltz said the vote was too close to call, and refused to admit defeat. New York-based Trian bought a $3.5 billion stake in P&G this year before embarking on the three-month board fight for one seat on the board.

Peltz has said if he won the proxy fight, he would move to expand the board to make room for Zedillo to remain a director.

©2017 Bloomberg L.P.

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