Given the challenges at Procter & Gamble, its shareholders should consider the assistance of Trian Partners.
Nelson Peltz, the corporate agitator, is opting for the close shave at Procter & Gamble.
Mr. Peltz’s Trian Partners, which owns a $3.3 billion stake, is taking a more surgical approach to the $223 billion company — whose brands include razors and detergent — than it did with its last proxy fight at DuPont, lobbying for a single board seat. Trian is also dangling niceties like promising to support management and not calling for a breakup.
Given Procter & Gamble’s many challenges, shareholders would be silly to pass on his assistance.
The company, which is based in Cincinnati and whose brands include Gillette, Tide and Pampers, is struggling to navigate changing consumer habits. Upstarts like the Dollar Shave Club have cut into its market share of products with easy online purchasing and delivery and original marketing. P.&G. is increasing its online presence and has fought back with price cuts, but its stock price has lagged competitors’ and the Standard & Poor’s 500 index in the last year, and — as Mr. Peltz points out — over the last decade.
Procter & Gamble’s revenue in the fiscal third quarter declined. David Taylor, the longtime employee who became chief executive two years ago, drummed up some new costs to cut, but analysts appear underwhelmed by the company’s focus on “irresistibly superior” products. Trian said it was concerned that $13 billion of identified cost savings would not materialize given an “overly complex organizational structure and a slow-moving and insular culture.”
While those may sound like fighting words, Mr. Peltz’s push comes with a smiley emoticon. Trian is not seeking a breakup, or to push out Mr. Taylor, or even to cut research and marketing expenses. Mr. Peltz’s first move as director would be to reinstate the board member he displaced.
It is a notable contrast with Trian’s approach at DuPont, where it sought four board seats and urged for a separation of businesses. Trian got no seats, but the chief executive was out five months later, and DuPont announced a merger with Dow Chemical that would lead to a breakup.
Procter & Gamble’s board may still be smarting from its last nick with activism. In 2013, the hedge fund boss William Ackman persuaded Procter & Gamble to remove its chief executive and bring back its former boss A. G. Lafley. Mr. Ackman then sold his shares. Yet, the company’s share price has increased less than 10 percent over the last four years — the stock market equivalent of five o’ clock shadow.
Mr. Peltz may not have all the answers to Procter & Gamble’s troubles, but a fresh look on the board is warranted.
