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Power play

5 February 2015 By Kevin Allison

DuPont has driven a wedge between shareholders and Nelson Peltz. Adding two turnaround veterans to the $70 billion chemical giant’s board may make stockholders think twice about voting in a rival slate from the billionaire activist’s Trian Fund Management. DuPont says Peltz nixed an offer to add one of his picks because he wanted the spot. He may just have been outplayed.

The nominees put forward by Delaware-based Dupont are impressive. Tyco International Chairman Edward Breen presided over two breakups at the once-struggling industrial conglomerate during his decade as chief executive. James Gallogly led rival chemicals maker LyondellBasell out of bankruptcy.

That kind of experience means Peltz, who says DuPont’s performance has fallen short under Ellen Kullman, and that the company should consider breaking itself up, may now face an uphill struggle to convince other shareholders to support his alternative slate. Of Trian’s four board nominees, including Peltz himself, only one – Robert Zatta, a former Campbell Soup executive who is now acting CEO of soon-to-be-acquired lithium producer Rockwood Holdings – has experience at the helm of a chemical company.

It’s a crafty piece of jiu-jitsu by Kullman, after her initial response to Trian’s public critique of DuPont’s performance last autumn failed to impress. But Peltz left himself vulnerable to being boxed in by refusing to discuss a settlement with DuPont at a meeting in Chicago on Wednesday. In a letter to Trian, DuPont said it had also offered to put one of its nominees on the board if the activist agreed to drop its alternative slate. The company said Peltz refused to consider any deal that didn’t involve a seat for him personally.

Even if the blown power play results in Peltz’s slate getting shot down, the activist may end up relatively satisfied. At the very least, two strong independent appointments from DuPont’s own nominating committee should leave him feeling reassured that the refreshed board has the experience necessary to give proper weight to his proposals.


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