CINCINNATI - Former Procter & Gamble Co. CEO John Pepper urged shareholders Tuesday to “vote all your blue proxy cards” in favor of P&G’s management and against New York hedge fund operator Nelson Peltz.
“We don’t need someone to come in and try to figure out yet another new plan,” Pepper wrote in a letter to P&G shareholders. “We just got one. Now is the time to execute.”
It’s the first of what’ll likely be four CEO endorsements of P&G’s existing strategy, which calls for growing revenue and market share with targeted investments from a 5-year-old restructuring program. CEO David Taylor told WCPO last week that P&G’s “last four CEOs” endorse the plan. Pepper was CEO from 1995 to 1999, followed in that role by Durk Jager, A.G. Lafley and Bob McDonald.
“There’s a wide range of stakeholders that understand the power of P&G people,” Taylor said. “I’m very confident that P&G employees, P&G retirees, P&G alumni and other shareholders will see the merit of supporting a plan that’s working with a company that delivers strong results over time.”
Peltz has claimed in SEC filings that P&G suffers from an “overly complex organizational structure and a slow moving and insular culture” that prevents management from “responding to commercial opportunities in a timely manner.”
He’s asking shareholders to make him a 12th P&G director so he can push for reforms on their behalf. Among his partners in the quest is P&G’s former Chief Financial Officer Clayton Daley Jr.
“It’s been five years and the shareholder returns have not improved,” Daley said in a recent message to P&G shareholders. “It’s simply time to do something different.”
In his letter to shareholders, Pepper expressed “great confidence” in Taylor’s leadership and warned that Peltz could put “a serious brake on our momentum” if he joins the board.
“One director can make a big difference,” Pepper wrote, “in promoting or thwarting the creation of the most productive dynamics on the board itself and its interaction with management.”
Pepper also reminded shareholders that P&G has overcome uncertainty before:
“I walked in the door at 6th & Sycamore streets in Cincinnati 54 years ago almost to the day. Our sales then were just a little over $1 billion. Our stock (on an adjusted basis) was just under $1.00 per share. Its growth since then has averaged 8.6% per year and dividends have been on top of that. Sure, there have been dry spells. I don’t think we had one stock option in the money through most of the 70s. But we did not lose confidence. And here we are celebrating our 180th anniversary.”