Peltz uses commercials to petition P&G shareholders directly

CINCINNATI -- Facing deep-seated internal resistance to his radical vision of Procter & Gamble Co.'s future, activist investor Nelson Peltz took his record-shatteringly expensive battle for a board seat to a new arena Thursday. His $12.7 billion hedge fund, Trian Fund Management, purchased airtime to petition P&G shareholders directly through a series of commercials on Cincinnati-area stations including WCPO.

"This was the original widows and orphans stock," Peltz says in one commercial. "Everybody could depend on earnings going up and dividends going up and the stock going up. That hasn't happened in 10 years."

If he sways enough shareholders to win a seat Oct. 10, 75-year-old Peltz hopes to enact sweeping changes to the company's "insular" structure and reassign up to 9,000 corporate staffers so their work is directly tied to business growth.

Peltz's plan would, in broad terms, divide P&G into three separate, largely autonomous factions handling distinct aspects of its current workload. He and Trian believe this would make the corporation "nimbler" and create greater accountability within these smaller divisions, but current CEO David Taylor said it could be devastating for Cincinnati.

Both P&G corporate heads such as Taylor and prominent Cincinnatians such as Mayor John Cranley have resisted on those grounds; Taylor told Bloomberg he believed Peltz fundamentally misunderstood P&G, discounted already-ongoing restructuring efforts and did not truly care to learn more about the business he wants to transform.

"He said, ‘You oughta move your businesses out of Cincinnati,' which didn't make sense to me," Taylor told WCPO in August. "Cincinnati is our home where we have been for 180 years. We are committed to great results, but we are also deeply committed to the city."

In an interview with Bloomberg, Taylor and other board members also argued that P&G was already in the process of successful restructuring and had been for years. Peltz's suggestions would disrupt a plan that had already shown results, Taylor said.

"We need to stay on this plan because it's working," Taylor said. "When we do that, we will deliver better results in the future."

P&G stocks were trading near a 52-week high of $92 by the end of Thursday.

"If this were at the very beginning and someone said, ‘I have a ton of ideas,' that's a different situation," added board member and ex-Home Depot CEO Frank Blake in the Bloomberg article. "We're two years into this."

WCPO's editorial board, which consists of senior staff as well as engaged members of our community, rebuked Peltz's plan in a pair of columns. No member of the editorial board contributed writing to this article.

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