The Lawyers Behind Activist Shareholder’s Run for P&G’s Board

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By Madison Alder

Shareholder activist Nelson Peltz is in the running for Procter & Gamble’s board of directors again, in a remarkable turn of events. His lawyers are already claiming victory.

“Our goal through the entire process was to think two or three moves ahead,” said Aneliya Crawford, a lawyer at Schulte Roth & Zabel, who represented Peltz and his activist hedge fund, Trian Fund Management.

Crawford referred to the proxy contest in the past tense: “This was a complex fight, it was nothing short of that.”

A little more than a month ago, P&G announced that Peltz did not get enough shareholder votes to be elected to the board. But Trian said the decision was too close to call and that it would wait for certification by an independent inspector.

On Nov. 15, that independent inspector said the billionaire investor won his proxy fight at the consumer products giant, although P&G said the results are pending.

Lawyers working toward that outcome included Crawford and co-lead partner Marc Weingarten, along with Brandon Gold, Reuben Zaramian and Daniel Goldstein. Weingarten is a co-chair of Schulte Roth’s Shareholder Activism Group, which has represented activists like JANA Partners, Greenlight Capital, and SpringOwl Asset Management in successful activist campaigns in the past.

Michael Aiello of Weil Gotshal & Manges led P&G’s side of the fight. Aiello did not immediately respond to a request for comment.

Aiello’s primary experience, like many attorneys who represent clients in proxy fights, is in mergers and acquisitions. He has represented clients like Dow Chemical, Goldman Sachs, and Kroger in the past.

It’s too soon to declare an official winner and loser yet, though: P&G said the results are now “subject to a review and challenge period” where both sides will have a chance to look over the results and look for “discrepancies.”

The final results will be announced in the coming weeks.

Biggest Contest

Peltz’s challenge was the biggest proxy fight in terms of the target company’s market value and money spent on the contest.

P&G estimated it would spend $35 million, though Trian said the company would spend at least $100 million in its defense efforts, in an Aug. 16 letter to shareholders. Peltz’s Trian spent at least $25 million, according to a July 31 proxy statement filed with the Securities Exchange Commission.

Lawyers at Schulte Roth said they were able to achieve results for their client by staying focused and being bold.

“We were successful in staying on point,” Crawford said. “When you’re involved in the biggest fight ever, it’s easy to get derailed.”

She also said that activists have the benefit of being aggressive.

“Shareholder activists have the money, they have the ideas, and little reason to hold back,” Crawford said. Proxy fights like P&G’s show that “even the largest companies aren’t immune shareholder activism,” she said, and may help “embolden” other activists in future challenges.

Investor Outreach

The team used a strategy that involved a large shareholder outreach effort, including the use of social media to get their message out to retail shareholders, or individuals who own shares in the company, Crawford said.

Proxy fights often require strategy that doesn’t always stay within the bounds of legal advice, extending into counseling about advertising and business strategy.

“Newspaper ads, mailings, dedicated websites, and phone banks—all contribute to the overall cost but are essential in getting out the company’s message,” said Brandon Van Dyke, a lawyer at Skadden who represented DuPont in its 2015 contest with Trian.

More and more money is being spent on activist campaigns, according to a recent report from financial advisory firm Lazard. The amount of capital spent on activist campaigns in 2017—$45 billion—is almost double what it was last year, according to Lazard. This means there hasn’t been a shortage of need for legal counsel.

The engagements are typically confined to a clubby group of corporate attorneys—many based in New York—working at firms like Wachtell, Lipton Rosen & Katz; Schulte, Roth & Zabel; Cadwalader Wickersham & Taft; Paul Weiss; Skadden Arps; and King & Spalding.

“The level of sophistication of legal advice that clients are looking for in this space is increasing in that activist shareholders are making much larger investments, and they’re making those investments in much bigger and complex companies,” said Richard M. Brand, a lawyer with Cadwalader Wickersham & Taft LLP who specializes in shareholder activism and defense.

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