Procter & Gamble chief executive officer David Taylor doesn’t think the company needs to add Nelson Peltz to its board to make improvements.
“We are in the best position to return P&G to winning without adding Mr. Peltz to the board,” Taylor wrote in a letter to colleagues filed with the Securities and Exchange Commission on Tuesday. “We have the right plan in place, and thanks to your hard work, we are delivering what we said we would do. Of course there is more to be done to continue our progress, and we need to continue to pick up the pace and raise the bar.”
After four months of discussions with P&G, Peltz launched a proxy fight Monday seeking a seat on the company’s board through Trian Fund Management LP. Trian owns $3.3 billion in P&G stock, and filed a proxy statement with the SEC on Monday seeking to help the consumer goods giant to “address the challenges it is facing.”
Trian contends in the filing that P&G’s organic sales growth has slowed and the business has lost market share across many of its categories.
“Disruptive and existential threats are impacting the entire consumer packaged goods industry, including changes in technology and consumer behavior, and P&G must act with the greatest possible urgency to address the market share it is losing to both its peers and smaller local competitors, who are adapting to industry changes more effectively than P&G,” Trian wrote in the statement.
The fund also said that of the $10 billion P&G saved in its cost-cutting program, $7 billion was lost to foreign currency exchange and the other $3 billion did not drive sales or profits. Trian characterized P&G as a business with an “overly complex organizational structure and slow-moving and insular culture.”
Taylor’s letter on Tuesday echoed the statement P&G put out in response to Trian earlier in the week: “While the board is always willing to consider new ideas that may help drive profitable growth and enhance shareholder value, the board notes that Trian has not provided any new or actionable ideas to drive additional value for P&G shareholders beyond the continued successful execution of the strategic plan that is in place.
“As with all investors, P&G has maintained an active and constructive dialogue with Trian since it made its investment in the company, and I have personally been involved in discussions with Mr. Peltz,” Taylor’s letter continued. “While we are always willing to consider new ideas, we firmly believe we have what we need to execute our strategy to drive innovation, accelerate organic sales and volume growth, improve productivity and cost structure, and strengthen P&G’s organization and culture. That’s where we want to focus our energy, so we can create value for our consumers, employees and shareowners.”
P&G’s stock inched up one percent on Tuesday, to $88.64.