Too close to call: Why Procter & Gamble proxy fight is bound to be tight

Nelson Peltz has 60 million shares in his pocket on the eve of Procter & Gamble Co.’s annual meeting. He’ll need about 1.1 billion more than that to win a board seat at P&G, based on WCPO’s analysis of voting trends at P&G’s last three annual meetings. WCPO looked at the number of shares voted in P&G board elections from 2014 to 2016. Directors, running unopposed, consistently earned about 1.8 billion shares each year, all of them securing about 97 percent of all shares voted. But in all three elections, less than 80 percent of shares actually submitted a vote. This year, it will be different. Peltz and P&G have invested more than $60 million to gin up shareholder support for their dueling proxies. Shareholders were asked to submit blue proxies if they like the direction P&G is moving and support the company’s slate of 11 directors. Peltz is asking shareholders to vote a white proxy to make him a 12th board member, where he’ll push for another restructuring of P&G that he thinks will help the company grow faster. The hotly contested election is likely to increase shareholder participation. P&G has about 2.6 billion shares outstanding. If you assume 85 of those shares cast a vote, Peltz would need nearly 1.1 billion shares to reach a majority. A 95 percent participation rate would require 1.2 billion votes for the victor. To garner that level of support, Peltz needs to attract votes from all three of the broad categories in P&G’s shareholder base: Index funds, institutional investors and retail investors, including P&G retirees and their heirs.