Procter & Gamble Co (NYSE:PG) stock was down 1.65% after the noon hour on September 21. This is the biggest drop the stock has sustained since before its fourth quarter results were released in July. The fourth quarter results, posted on July 27, saw net income rise 13.5% to $2.22 billion or $0.82 per share. Revenue also beat analyst expectations rising to $16.08 billion.
However, the earnings beat was overshadowed by the constant pressure being applied by activist investor Nelson Peltz, the billionaire hedge-fund manager. Peltz has been actively seeking a board membership after criticizing the company for stifling profits by maintaining a “suffocating bureaucracy”. Peltz’s hedge fund Trian Fund Management owns over $3 billion worth of shares in Procter & Gamble.
The CEO and CFO of Procter & Gamble fired back after earnings and rejected the basis of a board membership based on the merit of Peltz’s “good advice”. CFO John Moeller pointed out that the company had cut its categories and slashed the amount of its brands by more than half. The company committed to making $10 billion in cuts over the last 5 years to improve efficiency.
On Monday, September 18 Peltz penned a letter to investors in which he scolded Procter & Gamble leadership for being paid full bonuses despite losing market share. He accused the board of “accepting mediocrity”. However the internal strife plays out, the stock has increased 10.5% in 2017 and still offers an attractive dividend of $0.69 per share representing a 3% dividend yield.
