Proxy Adviser ISS Backs Activist Trian in Procter & Gamble Board Fight -- 3rd Update
By Sharon Terlep
Less than two weeks before the largest proxy vote in history, activist Nelson Peltz got a key boost in his high-profile fight against Procter & Gamble Co.
Institutional Shareholder Services Inc., the largest proxy-adviser firm, recommended on Friday that P&G shareholders put the 75-year-old investor on the board over the company's protests. Another proxy adviser, Glass Lewis & Co., came out in favor of Mr. Peltz last week.
"There are several signs that the board could benefit from additional shareholder perspective and outside" consumer-products experience, ISS wrote in its 25-page report, which helps guide mutual funds and other institutional investors on how to cast their votes.
The two sides have traded barbs for weeks about whether Mr. Peltz deserves a seat on the consumer-products giant's board. Mr. Peltz's Trian Fund Management, which is one of the company's biggest shareholders with a 1.5% stake valued at $3.5 billion, has been amassing support.
The activist has been amassing support in recent weeks. Another top shareholder, Yacktman Asset Management, which owns about 15 million shares of P&G, or a 0.6% stake, said earlier this month it is backing Mr. Peltz. Five former board members of H.J. Heinz Co. wrote a letter to P&G's board in support of Mr. Peltz, who won a seat on the ketchup-maker's board in 2006 after a proxy fight.
ISS's recommendation was largely a criticism of P&G's current board, which is stacked with current and former leaders of blue chips like American Express Co., Home Depot Inc., Hewlett-Packard and Boeing Co.
While noting positive results since Chief Executive David Taylor took over P&G nearly two years ago, ISS blamed directors for ill-advised acquisitions and CEO turnover in recent years. It criticized the company for failing to consider outside candidates following the troubled tenure of Mr. Taylor's predecessor.
"The board's handling of CEO succession during the better part of a decade left a lot to be desired, and subjected the company, and shareholders, to years of underperformance," the proxy firm said.