Bill Nelson in Chief Executive: Lessons From Investor’s P&G Board Bid

01/30/2018

Chief Executive magazine quoted Haynes and Boone, LLP Partner Bill Nelson on lessons learned from hedge fund investor Nelson Peltz’s bid for a seat on P&G’s board.

Among the lessons Chief Executive cited:

Listen to your shareholders. If your company has been struggling, as P&G was, with lackluster share price, stagnant organic sales growth and lost market share in key product areas, take your shareholders’ concerns seriously and avoid taking a defensive posture, says Bill Nelson, partner and head of the corporate practice group at Haynes & Boone, an international corporate law firm, which has helped midsize companies defend against activists.

“These campaigns are brought because the shareholder feels like they aren’t being listened to,” he says. “If your CFO is taking time to listen to their concerns, you may be able to forgo some of the pain that comes from a proxy fight.” Talking with investors one-on-one your CFO may also be able to assuage concerns over short-term results by explaining why the company’s long-term strategy will ultimately bear fruit. ...

Think like a shareholder. Get out in front of a potential campaign by proactively addressing weak areas. “Really examine those things that institutional shareholders find important,” says Nelson. For example, if a division of the company has been underperforming for more than a year, expect shareholders to push for divestiture – or a clear strategy for rebound. Recently, he adds, shareholders also have focused on increasing board diversity and the frequency of board renewal. “To the extent that you’re behind the times in those areas, you need to update those policies.”

Excerpted from Chief Executive magazine. To read the full article, click here. (See page 52.)

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