Going in hot
Dan Loeb has some buttering up to do at Campbell Soup. The head of Third Point has called a truce with the $12 billion soup and snack company after it agreed to give him representation on the company’s expanded board. It’s a bigger win than the single seat that cage-rattler Nelson Peltz received at Procter & Gamble last year. Still Loeb has been highly critical of Campbell, and his tactics were more aggressive. Now he has to figure out how to be effective.
Loeb nominated a slate of 12 directors to replace the entire board in September. The hedge fund launched a website, put out a lengthy report, and attacked Campbell for its poor acquisition history and bad management. What he’s ended up with is pretty mild. He has chosen two new members to expand the board and will have a say in appointing another. He will also counsel on hiring a new chief executive by the end of the year.
The campaign is starkly different from competitor Nelson Peltz’s gentle war with P&G a year ago. Peltz asked for only a single board seat and promised not to do anything drastic. Even that small request led to an acrimonious shareholder vote that Peltz lost. Still, he was placed on the board, and a year later, Peltz has managed to help along solid changes, including the company’s largest internal restructuring in two decades.
Third Point has more representatives at Campbell, but a tougher path. His members will constitute less than a quarter of the board, but Campbell’s current members include descendants of the company’s founder who collectively own roughly 40 percent of the stock, and people who have been loyal to them for decades. Loeb has also agreed not to try to oust any other directors for a year.
Loeb is known for getting what he wants in roundabout ways. He called for Sotheby’s CEO William Ruprecht to quit in 2013, and while what he actually got was three seats on a similarly sized board, Ruprecht later stepped down anyway. Campbell may yet feel the activist’s sharp elbows, but if he wants to get things done, Loeb’s activist tactics are better served warm than frosty.