P&G adds Nelson Peltz and Joseph Jimenez to Board of Directors.
Procter & Gamble, in a December 15, 2017 press release, announced the certified results of its recent Board of Directors election. According to the release (link underlined above), all 11 of the company nominated Directors were elected. Additionally, the company announced it is adding two new seats to its Board.
One of the new Board members is Novartis CEO Joseph Jimenez, appointed for his expertise in Consumer Products, Healthcare & International business. Interestingly, the other new appointment, due to shareholder input and almost 50% of the vote count, was Nelson Peltz of Trian Partners. His addition came with what appears to be a set of pre-agreed conditions or at least an informal set of common understandings about the future of P&G.
Per the company’s release, Peltz and the company agreed not to move the company out of Cincinnati, not to take on excessive leverage, not to break-up the company, and not to substantially reduce R&D spending. A quick scan of a list of eight â€œNOTâ€ statements on page four of the September 6, 2017 Trian Partners white paper â€œRevitalize P&G Togetherâ€Â shows that the newly agreed upon conditions were explicitly not part ofÂ the Peltz/Trian revitalization plan. That begs the question why P&G spent so much time, effort and money to keep Peltz off the board.
Now that the election is complete and the Board appointments are made, what does this mean for the future of P&G? Keeping in mind that Nelson Peltz is one member on a Board of 13 Directors, the additions of Peltz and Jiminez does seem to indicate that P&G is more open to new insights for their corporate goals & initiatives. As for Peltz and his ideas, Trianâ€™s P&G white paper (link underlined above) gives readers bullet points and more detailed explanations regarding big picture goals and some specific strategic changes. Summarizing, it appears Trian is keyed on issues such as; rekindling innovation, speeding responsiveness â€“ especially to new market dynamics (like Dollar Shave Club perhaps), addressing international market share & international margins, better aligning executive compensation to company goals, and re-evaluating the corporate reporting structure.
Even if the only constant is change, change is still never easy, but it is much better to drive it than succumb to it.