International Shareholders Services has endorsed two of Trian Fund Management’s selections for the DuPont Co. board. The actions of the service are closely watched in corporate battles.
Trian’s head Nelson Peltz is seeking a seat on the board, a nomination that was flatly rejected by DuPont.
DuPont issued the following statement that claimed ISS was not correct in its assessment:
We strongly believe ISS reached the wrong conclusion in failing to recommend that shareholders vote on the white proxy card FOR all 12 of DuPont’s highly-qualified and experienced director nominees by ignoring the success of our transformative strategy and the value-destructive nature of Trian’s break up agenda, as well as dismissing the fact that the addition of Trian’s nominees would remove critical experience from DuPont’s Board. This demonstrates a fundamental lack of understanding of our business and the needs of a global science company.
We are confident that shareholders will do their own analysis and believe they recognize that DuPont has the right strategy and right Board to continue overseeing the successful transformation of DuPont. DuPont’s shareholder returns during the last 1-year, 3-year and 5-year periods were 17%, 78% and 160%, all in excess of our proxy peers and the S&P 500.
And during current management’s tenure, DuPont has delivered total shareholder returns of 266% compared to 159% from the S&P 500 and 133% from our proxy peers.[i] We also have delivered a 740 basis point expansion in segment-adjusted operating margins,[ii] while returning approximately $14 billion of capital to our shareholders since 2009. The actions the Board has taken to transform DuPont are producing results, clearly visible in the 19% adjusted operating EPS compounded annual growth rate of our ongoing, post-spin business – which translates into 188% growth in adjusted operating EPS.[iii]
Importantly, DuPont’s Board has the right mix of experience and skills required to lead a global science and technology company of DuPont’s scale. Each director is extremely qualified and brings unique experiences that are highly beneficial to DuPont. Unseating directors who bring important skills such as corporate governance experience, science and technology acumen, regulatory and government relations knowledge, emerging market growth experience, global manufacturing and supply chain knowledge and environmental management experience, would deprive DuPont’s Board of critical skills that are central to DuPont’s purpose and value proposition. Furthermore, Trian has a well-known practice of establishing a ‘shadow management’ team, which would be committed to advancing this agenda, derailing DuPont’s progress on our strategic transformation plan.
We urge shareholders to protect the value of your investment and to prevent Trian from pursuing its value-destructive agenda. Please vote FOR all 12 of DuPont’s highly qualified directors on the WHITE proxy.
At one point, DuPont said one member of the Trian slate was qualified to serve on its board.
Some investors in DuPont have been seeking a peaceful resolution of the battle before the company’s annual meeting in mid-May and there have been suggestion that a compromise might involve two from the Peltz slate.
Some institutional investors have expressed support for the Peltz slate, with others siding for DuPont.
Peltz has continued to claim that the company should sell off other businesses and reduce overhead and non-core functions such as the operation of a hotel and country club in the Wilmington area.
Peltz declared the recommendation as a victory for Trian in a CNBC interview. Trian owns less than five percent of DuPont shares, but has a long history of forcing changes at large companies.
DuPont has been selling and spinning off businesses. Later this year, the Performance Chemical Business, Chemours will become a separate company with the companies swapping headquarters sites.
Chemours will move downtown, with DuPont transferring corporate offices to Chestnut Run, a DuPont site just outside Wilmington.
The vote for the proposed board slates of DuPont management and Trian is believed to be too close to call. Both entities are running full page advertisements locally in an effort to move DuPont retirees and employees to their side.
