A Case Study On Shareholder Activism, Proxy Advisors, And The Proxy Voting Process

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a. Case Study Introduction & Background
The literature on shareholder activism, proxy advisors, and the proxy voting process summarized in previous sections can be put into context with a case study on the recent DuPont (NYSE: DD) vs. Trian Fund Management Proxy Fight that occurred between 2014 – 2015. The DuPont vs. Trian Fund proxy fight, one of the largest proxy fights in history, will give insights into the influence and tactics of activist investors, the role of proxy advisors such as ISS and Glass Lewis, and mergers as a result of activist investors.
DuPont is a 214-year-old global chemical company that creates chemicals for agricultural, consumer, and industrial products. At the time of the case study, the company was led by Ellen
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Some major campaigns include GE, Wendy’s, PepsiCo, Pentair, Mondelez, and most notably DuPont. In early 2013, Trian took a passive $1.6 billion stake in DuPont, which at the time represented a 2% stake in the company, making Trian one of DuPont’s largest shareholders.

b. Trian Fund’s Demands & Investment Thesis Private Discussions Go Public: Trian privately engaged in dialogue with DuPont’s management team and lead director from 2013-2014 regarding specific initiatives Trian believed would “significantly” improve DuPont’s financial position. DuPont began to engage privately with DuPont to address the perceive underperformance in their stock price. (Please refer to Exhibit 1 for a detailed stock price chart with a timeline of major events) After DuPont’s management team failed to implement any of Trian’s demands, the activist fund decided to go public with their demands and released their first white paper on September 16th, 2014. The public announcement of Trian’s involvement with DuPont was perceived positively by the market and the stock was up 9.6% upon announcement. Trian’s Investment Thesis: Trian’s investment thesis and reason for public intervention was simple: DuPont’s conglomerate structure is destroying value. Trian outlined five major points for why DuPont was an inefficient conglomerate (Source: Trian Fund’s September 16th, 2014 White Paper):
1. Excessive
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