Recount Surprise: Marc Pritchard’s Agenda Under Siege As Activist Peltz Appears To Win P&G Board Seat

Activist investor Nelson Peltz of Trian Fund Management won a recount vote for a board seat at Procter & Gamble.

In the wake of the early October vote, the initial vote count had Peltz down by a narrow margin, but that now appears to be wrong. In a statement shared with AdExchanger late Wednesday, the company said Peltz “is leading” by a tiny margin of 0.0016% of shareholder votes. P&G will still be able to challenge Wednesday’s recount during a review period.

Peltz would hold only one of 11 board seats, and has previously said he would support expanding the board to 12 to re-seat Ernesto Zedillo, Peltz’s opponent in his board vote (and the former president of Mexico), but the reversal could have repercussions in how the world’s biggest ad spender approaches marketing.

In its report supporting Peltz’s bid, Trian advocated for P&G to consolidate from 10 brand categories to three – “beauty, grooming and health care,” “fabric and home care” and “baby, feminine and family care” – and to reinvest savings from cutbacks.

Trian is not only interested in short-term profit gains. In P&G’s earnings report in July, CFO Jon Moeller said the company had trimmed $140 million from its cost structure, most of it from digital advertising.

P&G’s drop in ad spend helped preserve strong profit margins despite tepid sales, but, according to the Trian report, those gains should have gone to “other forms of brand-building to regain lost market share. Instead, management chose not to reinvest, in our view benefitting near-term earnings at the expense of long-term growth.”

It remains to be seen how Peltz’s potential board entrance will affect P&G’s advertising or Marc Pritchard, the company’s chief Brand Officer and one of the most vocal brand executives on transparency issues in digital media.

“It doesn’t matter about me. What really matters is the employees of P&G, the community in which we operate and the shareholders,” Pritchard told AdExchanger in October, the week before stockholders voted, about the Trian move.

“Splitting the company into three is a very bad idea,” he said. “We’ve done a lot of analysis that indicates that it would add a lot more cost to the business.”

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