By Sam Waltz
Will Nelson Peltz be back with a 2016 proxy bid, leading his Trian Fund to try to take a position on the DuPont Company’s board in an effort to accelerate DuPont’s strategic repositioning for profit growth?
That’s the question that’s really on business minds a few days after DuPont’s victory May 13 over Trian and Peltz in Trian’s 2015 campaign, which lasted about three- to four months.
For the answer to that, one needs only look to a famous bit of dialogue in Clint Eastwood’s iconic 1971 film Dirty Harry. Eastwood’s San Francisco Police Inspector “Dirty Harry” Callahan told the district attorney that the psychopath shooter known as the Scorpio Killer will strike again. “How do you know?” asks the DA?
“Cause he likes it,” replies Dirty Harry.
Although Peltz surrounds himself with a team of some global quality, one of them Delaware’s own Martin Lessner, a partner in the corporate law firm Young Conaway, the triage decision ““ whether Trian retains its holding of 2.7 percent of DuPont stock, or whether it sells its position ““ is the first decision that he’ll have to make. That arguably is the toughest call to make.
Peltz to date has declined to talk about his intentions, whether his Trian Fund will remain a significant DuPont Company shareholder, or whether he will sell those shares. But he was combative in a conversation with press at the end of the annual meeting, suggesting his inclination is to return. Beyond combative, he even was aggressive, perhaps demeaning, asserting “the emperor has no clothes” about DuPont’s current leadership.
Keys to answering that question about. Peltz’ intentions are the answers to these questions:
1. Does Peltz feel that his Trian Fund investment with DuPont is at risk, or is it a money maker for the fund and its investors?
2. Does Peltz feel he can leverage his shareholder position in a 2016 proxy Ffght in order to personally lead some increase in profitability?
3. And does Peltz feel he can successfully wage a 2016 proxy fight?
But perhaps a more important question, in a personal sense to Peltz, is:
To what extent does a second proxy fight – a successful one, this time – positively and historically burnish Peltz’ reputation as a Wall Street leader and fighter?
What many of us apparently missed in the run-up to the 2015 DuPont ““ Trian proxy fight was its historic proportions.
Analysts with whom we’ve talked feel that this will be a case for the business textbooks, and, although he lost, the lessons Wall Street learned in Peltz’ waging Trian’s $8 million proxy campaign vs. DuPont’s $15 million proxy campaign are important lessons, even precedent-setting, for the next generation of proxy fights.
“Historic” is a word that I never read in any of the coverage, but it will be used henceforth.
Because Wall Street seems to be first about the numbers, the profitability, earning per share, and the variety of financial metrics, the impact of personality often can be overlooked, except in cases like a Donald Trump. But few, if any, ever accorded the Trump-type narcissisms to Peltz as a key factor in the Trian proxy fight with DuPont.
Therein lies the motivation for a DuPont-Trian II proxy fight in 2016. It’s Peltz seeking a rematch against DuPont CEO Ellen Kullman and her board. If he’s successful, he etches an even larger legacy in American business history.
Peltz can go into the rematch confident that his Trian Fund investment in DuPont is safe, despite his chest-beating over DuPont profitability.
Turning a ship of Titanic size like the DuPont Company is a massive undertaking. Kullman has been accomplishing that effectively throughout her DuPont CEO tenure, and, frankly, given her bottom line focus, she and Peltz likely agree on more than they disagree on.
Even though DuPont share prices may not be growing at the accelerated rate Peltz would prefer, they still have been growing nicely.
Although at this writing, the final vote totals in the proxy fight have not been released by DuPont, Peltz seemingly came closer to victory in 2015 than anyone would have guessed or could have guessed just six months earlier. Given nearly 12 months to the next annual meeting, he will have plenty of time to tweak his strategy.
Plus, he’ll count on a business performance or a leadership misstep at DuPont and its specialty chemicals spinoff Chemours to throw some additional fuel on the fire.
If he’s successful in 2016, he could expect to see business historians brand his strategy after his name, “the Peltz maneuver,” or something like that, in the next chapter on proxy fights.
So, at the end of day, in preparation for DuPont’s 2016 annual meeting, as two wary foes likely circle each other in the campaign run up, will it be DuPont CEO Ellen Kullman or Trian’s Nelson Peltz uttering the other line Clint Eastwood line made even more famous as Dirty Harry in his 1983 film Sudden Impact, “Go ahead, make my day!” ♦
