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Net Net: Promoting innovation and managing change

Trian slams Dupont ahead of vote

At Trian, we put our money where our mouth is: Garden

Activist investor Trian Fund Management is turning up the heat on DuPont ahead of a key vote for the more than 200-year old company.

"The reason the company can't hit its numbers is because of a very bloated, expensive, bureaucratic holding company that is choking the underlying businesses," Ed Garden, CIO and a founding partner of hedge fund firm Trian, said Monday at the 13D Monitor Active-Passive Investor Summit in New York.

The comments came ahead of DuPont's annual meeting on May 13, when shareholders will vote to decide if four directors proposed by Trian will join the board.

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Garden reiterated the plan that Trian has already laid out for improving the chemicals company.

Proposals included reassessing DuPont's corporate structure and capital allocations, cutting costs and improving corporate governance, all points made at Trian's campaign site

Garden noted that it's rare for Trian to openly fight with company management. He said Trian first tried a private, collaborative approach, but it failed.

He noted several times that DuPont CEO Ellen Kullman had sold a majority of her shares in the company since Trian invested, about $80 million worth. That, to Garden, is a sign she doesn't have a strong belief in future company growth.

A DuPont spokesman gave this statement in response:

"Trian's inaccurate and misleading statements simply cannot change the fact that DuPont has outperformed under current management, and the strategy the Board is overseeing is delivering results. In fact, the ongoing business that will comprise DuPont following the spinoff of Chemours has already delivered higher growth, generating 19 percent compound annual growth in adjusted operating EPS over the past six years."

The company also noted that Kullman's compensation is "closely aligned with DuPont performance and shareholder interests," and it pointed out that her ownership position has increased over time and comprises the majority of her personal net worth.

"In the fall of 2014, some stock options that she owned were automatically exercised under a routine, preexisting 10b5-1 plan managed by a third party. These transactions had no impact on her steadily increasing ownership of DuPont stock."

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DuPont's stock is down nearly 3 percent so far in 2015.

"We will be a positive agent of change," Garden said in closing. "We'll make DuPont great again."