Activist investor Nelson Peltz late Friday received a major boost in his campaign for a seat on Procter & Gamble Co.'s (PG) - Get Procter & Gamble Company Report board after an influential shareholder advisory firm recommended that shareholders support his candidacy.
Glass, Lewis & Co. LLC, one of two major proxy advisory firms, said it was backing Peltz's candidacy, noting that "investors have an opportunity to encourage fresh discussions through the election of a qualified well-established shareholder candidate backed by what we believe to be cogent, well-framed arguments and a set of strategic initiatives that should, at the very least, set the table for a more candid evaluation of P&G's risks and opportunities."
The support of Glass Lewis was also a blow to Procter & Gamble CEO David Taylor, who recently suggested that a proposal seeking to restructure Procter & Gamble submitted Peltz was "very dangerous."
Taylor is locked in a heated battle with Peltz, who is seeking to obtain a director position for himself at the company's annual meeting Oct. 10 in what has emerged as the biggest U.S. boardroom battle in recent history. At the center of the dispute is the activist investor's assertion that P&G suffers from "suffocating bureaucracy" and should be restructured into three global business units rather than the four it has now. One core area of disagreement: the company's R&D budget and focus.
In addition to Glass Lewis, shareholders are awaiting a report expected to be issued shortly by the other major shareholder advisory firm, Institutional Shareholder Services Inc. Recommendations issued by the two proxy advisory firms carry a lot of weight with big investors.
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