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 Another day, another proxy fight. The showdown in the battle for control of H.J. Heinz & Co.'s board went down Aug. 16. The results came in about a month later, with activist investor Norman Peltz gaining a board seat for himself and, and one for one member of his slate of five nominees, Michael Weinstein. Peltz, at the helm of Trian Fund Management LP eagerly pursued appointments for his slate of directors to Heinz's board, while the Pittsburg food giant's chief executive William R. Johnson, fought heartily to make sure that didn't happen.
ONE STICKY SITUATION Peltz, a longtime vocal investor in food companies, sunk his teeth into Heinz last spring and went public with his proposed board appointments in March. His slate of nominees included:
Among those Heinz said he wanted ousted were:
Peltz got his way with the former, but the latter remains a director. Heinz agreed in July to add up to two director slots to its board, expanding it to 14, and proposed corporate governance changes. RED-HOT EXCHANGES The battle went back and forth for months now and rarely were Johnson and Peltz at a loss for words. Some particularly prickly remarks from each side: "Had Mr. Johnson delivered on his five restructuring plans for Heinz, S&P would not have downgraded the Company's debt ratings today. ... Put another way, Trian believes that if management had achieved all that they committed to in previous restructurings, ratings would have gone up. This is yet another example of Johnson's complete lack of credibility."--A Deal article quoting a Trian statement after Standard & Poor's downgraded Heinz's debt in June. "Now is not the time for adding a self-interested and divisive voice inside the Heinz board room or for distracting the Heinz board and management team. ... Independent stock analysts have characterized his [Peltz's] plans as 'overly aggressive' and 'not achievable.' "--A Deal article quoting Johnson in a June cover letter to a proxy statement urging shareholders to vote down Peltz's proposed slate of directors. "As for Mr. Peltz's assertion that Heinz should try to grow the overall market for ketchup, [Johnson] said: 'Tell G.M. to sell more cars.'" --A NY Times article July 27. THE GREAT SLIM DOWN Two months ago, Trian detailed its thoughts for a Heinz makeover in a 28-page document. To save Heinz $575 million, Trian suggested a diet of cost-cutting measures, leveraging new debt and shedding assets, and even hinted at a possible sale down the road. The Cayman Islands-based hedge fund wants the food company to put more money into advertising, suggesting measures like doing away with packets and making a small package of ketchup and offering it exclusively to McDonald's. Peltz has been dealmaking since the 1980s and recently has had his hand in several food compaines.
Heinz's current restructuring plan centers on re-focusing its base: condiments, meals and snacks, and infant nutrition. Some highlights include:
THE CONSEQUENCES While whether Peltz will gut the company now that he has gained board representation remains in question, the fate of the company's Pittsburg-based workforce has the Pennsylvania city on edge.--Carolyn Murphy
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