When octogenarian billionaire Nelson Peltz calls from his office in New York, perhaps — or basking in the sun, at his 44,000-square-foot mansion on Palm Beach — the world’s most powerful CEOs have reason to be alarmed.
Peltz’s firm, Trian Fund Management, specializes in activist campaigns against companies it believes are underperforming. Industry giants like DuPont, Procter & Gamble and PepsiCo have felt the heat.
Peltz described his philosophy simply in 2016: “We’re trying to figure out how we can increase sales and how we can prevent costs.” Sometimes that means helping show executives the door.
Tria’s latest target: Disney, where Bob Iger returned as CEO in November, less than three years after passing the torch to Bob Chapek. Since last summer Peltz was eager to sit on the board, but Disney didn’t follow through. As a result, Trian stepped up the pressure, launching a website called “Restore the Magic” and vowing to fight the other shareholders directly.
Peltz wants a clear succession plan for Iger and is looking to cut costs. And it seems he’s willing to embarrass Iger in order to gain prestige. In a recent filing, Trian said he no doubt wanted to schedule the board meeting on a date that would give Iger plenty of time “to sail his yacht off the coast of New Zealand.”
Trian declined to comment. Disney did not respond to an email from The Daily Beast.
Trian, which Peltz co-founded in 2005, oversees approximately $8 billion in assets under management. “It allowed them to get into a big game,” said Stephen Bainbridge, a professor at UCLA Law School who has extensively studied corporate governance.
“I would say that on the spectrum of hedge fund activists, Peltz is definitely on the aggressive end,” Bainbridge said, though he noted that Trian has made “changes that are considered beneficial” in many cases.
Because CEOs are known for having “big egos” and “nobody wants what they perceive as some sort of professional thug coming in and telling them to change their plans,” he says, getting executives to listen without a protracted battle, he said. “
Edward Rock, co-director of the Institute for Corporate Governance and Finance at NYU Law, told The Daily Beast that Trian “reaches out to companies because they really think they can make them better.” Then comes aggressive tactics.
For example, in 2017, Peltz began a protracted proxy fight with Procter & Gamble for a seat on the board of directors.
“Trian used the media and issued detailed white papers to criticize the performance of P&G’s CEO,” said Szu-yin “Jennifer” Wu, who taught corporate finance at the University at Buffalo during the conflict. According to media reports, the proxy battle cost more than $100 million, making it one of the “costliest battles in US corporate history.” (Peltz narrowly lost the final vote, Procter and Gamble said at the time, but he got a seat on the board nonetheless.)
In another case, Peltz reportedly warned Unilever chief Alan Cope against allowing brands to take political positions after a subsidiary of Peltz announced that Ben & Jerry’s ice cream would not be sold in Israeli settlements in the Palestinian territories. (Unilever later moved to prevent the ban from taking effect.)
“I’d say Peltz is definitely on the aggressive end of the hedge fund activist spectrum.“
Trian similarly sought to gain traction at Wendy’s, which it invested in in 2005, claiming the restaurant chain had “lost its way after the death of founder Dave Thomas.” At DuPont, meanwhile, Trian lobbied to split the business into different segments in 2014, a proposal that ultimately failed.
“Peltz has a pirate charm and a velvet glove. But don’t mistake the iron fist. “He is relentless in pursuit of his goal, which is value creation,” he said. Financial Times.
According to his critics, Peltz’s tactics prioritize short-term gains over long-term financial health. “They’re in it, and then they’re out it,” said Bainbridge, summing up the argument against many hedge fund investors. (Trian said the firm invests in companies for an average of six years when they get a board seat, longer than some competitors.)
Nadya Malenko, an associate professor at the University of Michigan, defended the activist industry, seeing Tria as potentially less adversarial than some of its competitors. “They’re good at adjusting the company and selling assets that the company doesn’t have a good ability to operate efficiently,” he said.
At Disney, Trian insists that he neither wants to fire Iger nor divest his assets. Instead, Peltz’s team argues, Disney needs to reduce its “non-core” costs, align executive compensation with the business’s target goals and improve its approach to acquisitions.
In a Jan. 8 letter to Disney’s board, the firm claimed that Trian investments, on which Nelson serves on the board, have roughly outperformed the S&P 500. [9 percent] every year during his participation in the board of directors.
Despite his victories, in recent years Peltz’s name has mostly been associated with his daughter, Nicola, who last spring married fashion designer Victoria Beckham, son of soccer legend David Beckham. The incident took place at Peltz’s Palm Beach mansion.
“There’s a certain irony here that a man who’s a multi-billionaire and known and feared in the corporate world … is behind a picture with a bunch of Beckhams in it,” Bainbridge said. “It looks kind of funny.”