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DuPont CEO Kullman Seeks To Fend Off Activist Trian

Strategy: Company appeals to shareholders in fight over board seats

by Melody M. Bomgardner
March 27, 2015 | A version of this story appeared in Volume 93, Issue 13

In a new video and 12-page letter, DuPont CEO Ellen J. Kullman asks shareholders to stay the course and not vote with Trian Partners, an activist hedge fund that seeks to elect four members to DuPont’s board and possibly break up the company. The vote will happen at DuPont’s annual shareholder meeting on May 13.

On DuPont’s website, Kullman and board member Alexander M. Cutler respond to Trian’s Feb. 11 letter and white paper criticizing DuPont management and governance.

In the letter, Trian CEO Nelson Peltz writes that his firm’s nominees—which include Peltz—would assess DuPont’s portfolio, cut costs, and increase dividends. Even DuPont’s R&D spending would come under scrutiny.

Trian’s “breakup strategy is high risk and would destroy shareholder value,” Kullman says in the video, “and their campaign rests in misleading and inaccurate statements about DuPont’s performance. Here’s the reality: Our plan is working.” She defends her strategy of investing heavily in science for DuPont’s three units: advanced materials, biobased chemicals, and agriculture and nutrition.

Activist investors won seats in more than half of contested corporate board elections in 2013 and 2014, according to corporate advisory firm FTI Consulting. What’s more, the majority of institutional investors report favorable views of activists. In DuPont’s case, institutions including investment banks and pensions control 69% of outstanding shares.

FTI advises its clients to stress the company viewpoint on their investor websites because that is where investors go first for information. In addition, FTI says, “studies indicate that adding images and video make the website far more likely to be viewed.”


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