Trian's Peltz to face close Procter & Gamble shareholder vote

By Svea Herbst-Bayliss

(Reuters) - Procter & Gamble Co on Tuesday will become the biggest ever company to face a shareholder vote over a proxy contest, seeking to prevent activist hedge fund Trian Fund Management LP CEO Nelson Peltz from securing a seat on its board of directors.

After the two sides collectively spent more than an estimated $100 million on mailings, phone calls and advertisements to woo investors, the outcome as of late Monday was too close to call, according to sources who had estimates of a preliminary voting tally.

Peltz has called for P&G to reorganize into three business units: beauty, grooming and healthcare; fabric and home care and baby, feminine and family care.

P&G, led by chief executive David Taylor, has countered that management is already working on several operational changes, and that Peltz does not have the relevant experience to be helpful in the process.

"Win or lose, Nelson Peltz has taken the activist campaign to the largest companies, which have previously been able to inoculate themselves from these kind of experiences by spending enough money to keep activists at bay," said Bruce Goldfarb, founder of Okapi Partners, which advises on proxy contests.

Trian, a $14 billion New York-based hedge fund, owns a $3.5 billion stake in the maker of Tide laundry detergent, Crest toothpaste and Charmin toilet paper. Three top proxy advisory firms, which influence the stance of many mutual funds, have recommended P&G shareholders vote to give Peltz a board seat.

Vanguard Group Inc, State Street Global Advisors and BlackRock Inc are P&G's top three shareholders. Individual stock owners, such as retirees and amateur stock pickers, collectively hold about 40 percent of the company's stock, a much higher proportion than at most big companies.

P&G's large retail base is due, in part, to long-running stock-based incentive plans for employees and the attraction of its well-known brand names for "mom and pop" investors. [nL5N1LW4W1]

This is only the third time Trian has waged a proxy contest in its 12-year history. Two years ago it narrowly lost a fight with DuPont, although within a year the company's CEO was out a job and a faster cost cutting was underway.

P&G has sought to make the vote a plebiscite on Peltz's qualifications to shape the strategy of a top consumer goods company, so a loss could be particularly bruising for him.

(Reporting by Svea Herbst-Bayliss in Boston; Editing by David Gregorio)