CalSTRS Sides With Peltz's Trian in DuPont Proxy Battle

May 12 2015 | 11:34am ET

The California State Teachers Retirement System (CalSTRS) has sided with activist hedge fund manager Nelson Peltz’s Trian Partners in its battle with DuPont.

CalSTRS voted its 3.6 million shares of DuPont in favor of Trian’s slate of four board nominees ahead of the company’s proxy vote at its annual meeting tomorrow. Michael Sicilia, a spokesman for CALSTRS, noted in a statement that “given DuPont’s poor operating performance over the past several years, including earnings in 2015 projected to be below 2011 levels for the fourth year in a row, CalSTRS has concluded that it is time to rejuvenate the board of directors.”

The $191.2 billion pension fund, one of the largest in the world, invested $300 million into Trian’s activist hedge fund in April 2011, according to Bloomberg. 

CalSTRS larger counterpart, the $305.3 billion California Public Employees Retirement System (CalPERS), announced last week that it supported DuPont in the battle and voted its 6.15 million shares in favor of the company’s board nominees. The Canadian Pension Plan Investment Board also voted its 1.1 million DuPont shares for the company’s 12 nominees. 

Other major institutional shareholders, such as Vanguard Group, with 5% of the company, State Street Capital, with 4.86%, and Black Rock Fund Advisors, with 3%, have not disclosed their plans. 

Trian owns approximately 2.7% of DuPont and is the company’s fifth-largest shareholder. Peltz went public with his activist effort in September 2014 and since consistently has criticized DuPont’s underperformance for months and contends separation of its volatile materials business from its other business units, which include nutrition and health, agriculture, and industrial biosciences businesses, would save $2-$4 billion annually. 

Trian has also complained about executive pay and governance issues at the company. In contrast to several other high-profile activist battles lately, such as the one between H Partners and Tempur Sealy, DuPont has steadfastly refused to settle with Peltz and has termed his criticisms misleading and his effort potentially damaging to shareholder value. 

Results of the proxy vote should be known by Wednesday afternoon. 

DuPont’s shares were slightly down ahead of the annual meeting, slipping under $75 in Tuesday trading. 


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