Procter & Gamble (P&G) CEO David Taylor’s woes are intensifying as activist investor Nelson Peltz’ efforts to get a seat on the Board of the FMCG giant gain traction, a move that could see the multinational company split into three distinct business units.
P&G’s major investor Yacktman Asset Management has backed Peltz alongside proxy advisors Glass Lewis and ISS, aligning themselves with an incoming force that Taylor has previously called “dangerous” to the long-term strategic interests of the company.
The Gillette, Olay, Oral-B, Vicks and Tide brand owner has already moved to decentralise global operations to give its smaller markets more control over local conditions, but Peltz is advocating a company-wide restructure that would see three autonomous business units created.
The former Heinz Board member has gained support among many stakeholders in the company who are increasingly frustrated with the lack of innovation coming from P&G leadership, believing Peltz will bring a fresh perspective to top-level decision making.
Even if he does find his way to the Board though, he’ll have to convince other members that his plan to decentralise the core of the business will bear fruit.
Peltz also advocates broad-based change to P&G’s merger & acquisition (M&A) strategy, which he believes has been lacklustre in comparison to the likes of Unilever, which has been investing billions in acquisitions to ensure it stays relevant.
Needless to say, the existing Board isn’t all too keen on the “fresh perspective” that’s now supported by a major shareholder.
“We firmly believe now is not the time to risk derailing our progress by adding Trian’s Peltz to the P&G Board,” the company has said. “Peltz’s flawed suggestions and outdated views underscore his fundamental misunderstanding of the P&G of today.”
