CINCINNATI – Activist investor Nelson Peltz narrowly lost his bid to win a board seat at Procter & Gamble Co., according to a preliminary tally by the company following an expensive proxy fight that left investors nearly evenly split.
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"We will continue to respectfully engage with Nelson Peltz, whose input we value," P&G CEO David Taylor said to cheers and a standing ovation at P&G's annual meeting. The company said its preliminary tally showed all 11 current directors had been re-elected, without disclosing the vote count.
But Mr. Peltz wasn't ready to cede defeat, saying after Tuesday's meeting that he disagreed with the company's counting of the ballots. His Trian Fund Management wants to wait for the tally to be certified and plans to challenge the vote, the firm said.
"Our numbers said it's too close to call; it's not over until it's over, " said former P&G finance chief Clayton Daley, who worked with Trian.
After the two sides spent at least $60 million and crisscrossed the country to win shareholder support, the vote was too close to call when the meeting started Tuesday. It could take days or weeks to certify the final tally, people familiar with the matter said.
Mr. Peltz and Mr. Taylor shook hands after the meeting. Mr. Peltz congratulated Mr. Taylor. "We'll talk," Mr. Taylor said.
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"We'll talk but we don't listen," Mr. Peltz said. Mr. Taylor responded, "No, no, no, that's not true."
The stock slid immediately after the announcement and was down 1.2% to $91.01 in recent trading.
Mr. Peltz, whose Trian Management Fund is one of P&G's top investors, sought a board seat over the company's objections. He has argued the company needs to streamline its operations and bring in outside talent. P&G has said he would disrupt a turnaround that is under way.
While most votes are cast online, an unusually large number of votes being cast the by paper ballot slowed the counting process, a P&G spokesman said Tuesday. "If it gets really close, there's a Florida situation," he told reporters before the meeting, referring to the 2000 U.S. presidential election.
More than 400 people showed up at P&G's Cincinnati headquarters for the meeting, the crowd filling an auditorium and spilling into two overflow rooms.
Mr. Peltz spoke briefly at the meeting's start and said the close vote may mean the outcome won't be known Tuesday. "Win or lose, the shareholders have spoken," he said. "Either way today's vote is a vote for bold change."
David Taylor, P&G's CEO, gave a speech in which he laid out the company's progress, from new products to share gains in some markets.
"We're willing to change anything except our core purpose, values and principles," he said.
The high turnout reflects the unusually high number of P&G shares held by individuals, and particularly the high number who live in the city. Retail investors own roughly 40% of the company's roughly 2.5 billion shares, compared with an average of just 12% at the S&P 500, according to S&P Global Market Intelligence.
Two top proxy advisers, Institutional Shareholder Services and Glass, Lewis & Co., had recommended investors vote for Mr. Peltz, but not all mutual funds and index funds follow their advice. P&G's three biggest investors -- Vanguard, BlackRock and State Street -- voted against Mr. Peltz in his unsuccessful proxy fight with DuPont Co. in 2015.
The P&G vote came a day after another corporate giant, General Electric Co., agreed to give Mr. Peltz's co-founder at Trian a seat on its board.
P&G shares over the last decade have lagged behind competitors and the S&P 500. Its stock price is up more than 20% since Mr. Taylor became CEO, an increase in line with the S&P 500. Trian has argued Mr. Peltz's involvement in the company has helped buoy the stock.
Each side has sent its own ballot with a slate of 11 directors -- P&G's blue, Trian's white. Trian's replaces Ernesto Zedillo, the former president of Mexico, with Mr. Peltz, though the activist has pledged to renominate him if Mr. Peltz wins. Holders can only vote on one ballot, though they can vote for fewer than 11 nominees. The 11 that get the most votes of the 12 nominees will be seated.
P&G rejected Mr. Peltz's attempt to get a board seat, saying his ideas are either ill-informed or retreads of work that is already under way. Its executives warned that adding the outsider to the board could disrupt the company's progress.
Trian said the company should organize itself into just three business units, down from 10, by combining businesses, such as beauty, grooming and health care. The units, Trian said, would operate autonomously and have total control over sales, marketing, manufacturing and other major functions.
On Tuesday, Mr. Peltz said the vote was close enough that shareholders had sent a message the board. "The board owes it to the shareholders to really study the issues, the issues of structure and the issues of culture," he said.
Juanita Zahner, a P&G retiree from St. Louis who worked in the company's plant there, came to the meeting with her husband and said she voted against Mr. Peltz.
"Procter's been good to us, and I don't like what these guys have done to other companies," said Ms. Zahner, 74 years old, a shareholder for 40 years. "Ever since we retired, we've been wanting to go to a shareholders' meeting. This seemed like the one to be at."
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(END) Dow Jones Newswires
October 10, 2017 11:24 ET (15:24 GMT)