EI DuPont de Nemours & Co. (DD)

[TRUISM]

DuPont Ups Proxy War Rhetoric
Jeff Mordock, The News Journal 8:54 p.m. EDT April 9, 2015
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Signs that the proxy war between DuPont, led by CEO Ellen Kullman (pictured), and Trian hedge fund, led by Nelson Peltz, will go down to the wire is evident, experts say, by tactics seen this week.
(Photo: ROBERT CRAIG/THE NEWS JOURNAL)




DuPont's multiple efforts this week to reach shareholders deciding the proxy war with Trian Fund Management is a sign the vote margin is razor thin at the moment, experts said.

The chemical company went on the attack this week to sway stock owners to support its board candidates over those nominated by Trian, a New York hedge fund led by activist investor Nelson Peltz.

On Monday, DuPont filed an investor presentation claiming Trian's potential plan to split the company could exceed $4 billion in costs in the first year. DuPont followed the presentation with a Thursday shareholder letter detailing the collective advantages of its board candidates.

Trian, which owns a 2.7 percent stake in DuPont, initiated a proxy war in January to place four candidates, including Peltz, on DuPont's 12-member board.

"The [DuPont] board recommends that shareholders support all of its nominees because Trian's nominees do not bring skills or expertise that are additive to the DuPont board and are committed to Trian's value destructive breakup agenda," the company's current board members wrote in the Thursday letter.

In addition to the shareholder communications, Harvard Business School fellow and former Medtronic Chief Executive Officer Bill George authored an opinion article in the New York Times. George alleged Trian's plan for DuPont would negatively impact the company's research and development pipeline.

George's article followed Yale School of Management professor Jeffrey Sonnenfeld's opinion piece in the Wall Street Journal claiming activist investors often produce sluggish returns after joining a corporate board.

Gregg Schmidt, a DuPont spokesman, said the recent efforts are an attempt to educate shareholders about their choices in the proxy war.

"We are reaching out to our shareholders in advance of our annual meeting to ensure they are informed about the importance of voting for DuPont's directors," Schmidt said. "It is important for DuPont shareholders to be well-informed so they can protect their investment."

Trian responded to DuPont's recent shareholder offensive with their own stockholder letter. In the letter, Trian's management accused DuPont of attempting to draw attention away from what they claimed is a lackluster financial performance.

"DuPont is attempting to distract and mislead stockholders from the real issues at the company – its consistently subpar performance and, in our view, management's lack of confidence in the company's future," Peltz and the other management members wrote.

Analysts said the increased rhetoric could mean the proxy war may be decided by only a few votes.

"I think the pace of things that both sides are putting out there implies to me that this is viewed as a pretty close contest," said Matt Arnold, an analyst with Edward Jones Investments in St. Louis.

Charles Elson, a professor of corporate governance at the University of Delaware, said he expects both sides to use every resource they can to make their point. He agreed that this week's DuPont activity is a sign of a very contentious and tight proxy vote.

"You don't turn up the heat unless you believe there is an issue," he said. "To me, this means DuPont thinks this will be a close call."

Elson added that the pace of shareholder presentations by both sides will likely increase before the shareholders cast their vote at the May 13 annual meeting at DuPont's Chestnut Run headquarters.

"I would not say that any of this is very unusual," he said. "In fact, it will become more vociferous as we get closer to the wire."





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