P&G Finds Director Search Hard -- WSJ

By Sharon Terlep Features Dow Jones Newswires

Peltz fight highlighted need for experience in consumer goods, but candidates scarce

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This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 10, 2017).

As Procter & Gamble Co. executives traveled the U.S., asking shareholders to vote against activist investor Nelson Peltz's bid to join their board, one request kept coming up: Add a director with experience in consumer goods.

It is proving to be a surprisingly difficult demand to fulfill, even for a consumer-goods company.

P&G, still awaiting an official vote count in its apparent victory over Mr. Peltz's Trian Fund Management, said this week that it is doubling its efforts to find someone who fits the bill. It is seeking at least two new directors to fill seats coming open in the next two years.

Complicating the search is that many executives with consumer-products experience either work for a competitor or are P&G veterans, which the company is looking to avoid, P&G's general counsel Deborah Majoras said.

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"That is harder to do than most people think," Ms. Majoras said. "Taking into account all the conflicts, it starts to whittle down the list quickly."

The challenge is both a consequence of P&G's vast reach in the global consumer-products industry, and of consolidation over the years that has shrunken the number of players.

Ms. Majoras said the company expects to find someone who both meets P&G's criteria for directors and has a background in consumer products. The company is working with an executive-search firm and has a few candidates in mind, she said.

The lack of an industry veteran on the board was among Mr. Peltz's criticisms of P&G in his proxy fight against the company. P&G said more consumer-products experience on the board was "the No. 1 point" made by shareholders leading up to the Oct. 10 shareholder vote.

P&G has said it defeated Mr. Peltz by 6.15 million votes, about 0.2% of its shares outstanding, based on a preliminary tally. An official count is expected to be complete as soon as next week.

A Trian representative declined to comment. Mr. Peltz argued that as a major investor, he deserved consideration for a board seat.

Some other investors echoed that sentiment, but P&G decided against specifically seeking out a shareholder. The company said it would, however, consider adding an investor who met its other criteria.

Stephen Yacktman, chief investment officer of Yacktman Asset Management, a money manager in Austin, Texas, with a $1.3 billion P&G stake, said the company needs an investor on the board.

"Large shareholders would be the first place you'd start if you were to formulate a new board," Mr. Yacktman said in an interview before the vote. "That's a voice that's just not represented right now."

In addition to consumer-goods experience, P&G is seeking candidates with backgrounds in e-commerce and digital technology, as well as female and minority candidates.

P&G's board, composed almost entirely of retired and current chief executives from other industries, has 11 members and can have as many as 15, so it is possible that it would add more than two directors.

Intuit Inc. co-founder Scott Cook, on the board since 2000, will step down next year when he reaches P&G's 18-year term limit. Former president of Mexico Ernesto Zedillo, on the board since 2001, is also approaching the limit.

Write to Sharon Terlep at sharon.terlep@wsj.com

(END) Dow Jones Newswires

November 10, 2017 02:47 ET (07:47 GMT)