Despite an earlier rejection from DuPont, Trian is standing behind its four nominees to DuPont’s board and upping its pressure on the chemical giant through a public relations campaign meant to appeal to dissatisfied DuPont shareholders.
Last week, DuPont attempted to scuttle Trian’s efforts by naming two seasoned executives—James L. Gallogly, former CEO of LyondellBasell Industries, and Edward D. Breen, chairman of Tyco International—to replace two outgoing directors. The company also rejected three out of four Trian nominees to the board, including Peltz.
Trian is standing by its nominees. “Directors nominated by shareholders are more likely to be independent of management and, therefore, will hold management accountable,” Peltz, who controls a 2.7% stake in DuPont, said in a letter to DuPont stockholders.
Trian also set up a website, dupontcanbegreat.com, to distribute information to DuPont shareholders. The tactic is similar to one used late last year by the activist fund Third Point in its fight against Dow Chemical. Soon after Third Point launched value-dow.com, Dow agreed to back two Third Point-favored candidates for its board.
On its new website, Trian posted a fresh, 78-page white paper critiquing DuPont. The document repeats some of the arguments that Trian has been making for months: that DuPont is stymied by too much overhead, that its shareholder returns have been subpar, and that some of its strategic moves—including the sale of its coatings business to a private equity firm—have been missteps.
However, Trian also opened up new avenues for criticism. For instance, Trian sees a lot of waste in the $5 billion that DuPont has spent on agricultural R&D over the five years. It singles out Imprelis, the herbicide DuPont pulled from the market in 2011 at a cost, according to Trian, of $1.2 billion.
Trian also knocked DuPont CEO Ellen J. Kullman for selling off 54% of her personal DuPont shares since Trian started buying DuPont stock in March 2013. “Does the CEO selling stock betray a lack of confidence in her own plans for the company?” Peltz asked in his letter.
DuPont says the sales were options sold automatically and on her behalf by a third party.
Trian also struck a conciliatory tone, softening its argument that, after its spin-off of the performance chemicals firm Chemours, DuPont should be further split between lower growth businesses, such as electronic chemicals, and higher growth businesses, such as nutrition and health.
“Trian nominees are open-minded to keeping the portfolio together if performance can be improved,” the hedge fund noted.