(Adds details from proxy filing, Trian press release, background)
July 17 (Reuters) - Trian Fund Management LP said on Monday it was seeking a seat for its billionaire chief executive on Procter & Gamble Co's board, as it looks to push the company to take more drastic steps to revive sales and profits.
Trian's announcement marks the official launch of the largest proxy fight ever, with the activist fund squaring off against a $222.7 billion consumer products behemoth.
The battle comes as activist investors, emboldened by years of successful campaigns for changes at corporations across the U.S. and abroad, use their growing coffers to seek bigger targets.
Trian, which owns about $3.3 billion of P&G's stock, or 1.5 percent of the company, urged shareholders to vote for the fund's CEO and co-founder Nelson Peltz at the company's upcoming shareholder meeting, citing his track record of working with managements to turn around consumer companies.
P&G's proxy filing, disclosed on Monday, shows that Trian's dialog with the company goes back to Feb. 16, when Peltz called P&G Chief Executive Officer David Taylor to make the introduction and set up an in-person meeting.
What followed was five months of discussions between senior leaders at Trian and P&G over the company's strategic direction and what was needed to boost its lagging share price.
But over the course of the meetings, the two sides failed to reach an agreement that would avoid a public fight.
Trian said in a press release that its bid to get Peltz elected to the board centers on P&G's continuing underperformance, excessive costs and complex bureaucracy (http://bit.ly/2t7h62c)
"We believe that many of (P&G's) challenges relate to the company's organizational structure and culture, which can be highly resistant to change," the fund said.
Shares of the company were up slightly at $87.17 in early trading.
OCTOBER ANNUAL MEETING
With P&G's annual meeting usually held in October, the two sides have roughly three months to continue to discuss ways to avoid a shareholder vote on Peltz, who if elected would boost the board to 12 members.
Avoiding a fight will largely hinge on what other P&G shareholders think is best for the company.
"As we have written previously, we think P&G is doing the right things and the issues they have will take time to fix," said RBC Capital Markets analyst Nik Modi in a research note.
P&G's proxy filing noted that last Tuesday, in a meeting between Trian and members of P&G's board, Trian said it was moving ahead with its campaign to elect Peltz because the company was not moving fast enough to improve its performance.
P&G directors at the meeting said they too were not happy with the performance, but that they felt that Trians representation on the board was unnecessary in light of recent initiatives undertaken by the company," the filing said.
In a bid to boost profits even as sales remain stagnant, P&G has sold unprofitable brands, including 41 beauty brands to Coty Inc, and focused on core brands such as Tide, Pampers and Gillette.
However, those efforts have failed to boost the company's stock much beyond the level where it traded at the beginning of this year. The company had a market value of $222.77 billion, as of Friday's close.
The two sides appeared near an agreement to avoid a public fight, the filing shows, which hinged on P&G publicly committing to certain performance goals over a 12-month stretch and appointing Peltz to the board if the goals were not met.
But talks on such a statement broke down in May.
P&G said in an email on Monday that its board was confident that the changes being made by the company were producing results and expressed complete support for its strategy, plans, and management.
Trian said in its press release that it was not seeking a break-up of P&G or the ouster of the company's chief executive, adding that in case Peltz was elected he would seek re-election of the director he replaced.
Trian said that P&G's last cost-cutting program, launched in 2012, failed to impact profit or sales growth. (Editing by Saumyadeb Chakrabarty and Bernard Orr)