WHEN: Today, Tuesday, September 19, 2017
WHERE: CNBC's "Squawk on the Street"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Trian Partners CEO & Founding Partner Nelson Peltz on CNBC's "Squawk on the Street" (M-F, 9-11am ET) today, Tuesday, September 19, 2017. Following are links to excerpts from the interview on CNBC.com: https://www.cnbc.com/video/2017/09/19/nelson-peltz-pgs-cardinal-sin-was-to-reduce-advertising-while-losing-market-share.html and https://www.cnbc.com/video/2017/09/19/nelson-peltz-im-not-asking-for-pgs-ceo-to-step-down.html.
All references must be sourced to CNBC.
JIM CRAMER: ENGAGED INVESTOR NELSON PELTZ STEPPING UP THE PRESSURE ON PROCTER & GAMBLE IN RECENT DAYS. URGING SHAREHOLDERS TO VOTE HIS WAY AT THE COMPANY'S ANNUAL MEETING IN OCTOBER. PELTZ IS PUSHING FOR CHANGE AT THE COMPANY AND A SEAT ON PROCTER & GAMBLE'S BOARD. AND PROCTER & GAMBLES RELEASE REPORT TODAY TAKES AIM AT NELSONS RECORD. LET'S GET RIGHT TO IT, NELSON, NOW WE KNOW THAT WHEN DAVID--
NELSON PELTZ: GOOD MORNING, JIM.
CRAMER: GOOD MORNING, NELSON.
PELTZ: AND CARL AND DAVID.
CRAMER: I FORGOT. I FORGOT THAT AND I APOLOGIZE. AND I APOLOGIZE OKAY. SO, WHEN DAVID TAYLOR WAS ON "MAD MONEY," HE SAID POINT BLANK THAT YOU ARE DANGEROUS. DANGEROUS TO THE SHORT AND LONG-TERM. WHEN HE SAID IT, I SAID TO MYSELF, WE HAVE TO HAVE NELSON BACK ON. FIND OUT EXACTLY WHAT HE THINKS ABOUT THE CHARGE THAT YOU WOULD BE DANGEROUS TO THIS COMPANY.
PELTZ: YOU KNOW, WHAT'S DANGEROUS, JIM, IS THE WAY THEY'RE ACTING AND THE WAY THEY'RE RUNNING THIS COMPANY TODAY. THEY'RE OVERSEEING A MELTING ICE CUBE. THEY'RE LOSING MARKET SHARE CONSISTENTLY YEAR IN AND YEAR OUT FOR A DECADE. AND IT HASN'T CHANGED. AND WE'VE HEARD OVER AND OVER AGAIN THE NEXT GUY IN, THINGS ARE GONNA BE GREAT. THE NEXT GUY IN, THINGS ARE NOT GREAT. SO WHATS DANGEROUS IS TO CONTINUE THE WAY THEYRE DOING THINGS TODAY NOT ME. I'LL BE ONE VOTE OUT OF 12. HOW DISRUPTIVE COULD I POSSIBLY BE?
CRAMER: WELL BUT I THINK PROCTER & GAMBLE WILL COME BACK AND SAY YOU CAN BE VERY DISRUPTIVE BECAUSE YOU STILL WANT REORGANIZATION OF A COMPANY THAT'S REPEATEDLY REORGANIZED AND THEY'RE FINALLY ON TRACK.
PELTZ: YOU KNOW, I DON'T THINK THEYRE FINALLY ON TRACK SO LETS STOP RIGHT THERE. BUT I THINK A COMPANY THAT IS CONSTANTLY THROUGH REORGANIZATION IS A VERY, VERY DANGEROUS THING. YOU KNOW, WE HAVE REORGANIZED COMPANIES OVER THE YEARS SNAPPLE. AMERICAN CAN, ETC. ETC. AND THE MOST IMPORTANT THING YOU CAN DO IN A REORGANIZATION IS HAVE A START TIME AND A STOP TIME. AND EVERYBODY KNOWS WHERE THEY NEED TO BE, WHERE THEY BELONG, WHAT THEY'RE GONNA BE DOING. AND YOU HAVE TO GET THROUGH IT QUICKLY. THIS COMPANY HAS GONE THROUGH TEN YEARS OF SEVERAL REORGANIZATIONS. MY REORGANIZATION, I CAN'T MANDATE, I CAN ONLY ASK THE BOARD TO HAVE A REALLY HONEST AND OPEN DISCUSSION. ONE DIRECTED TO THE OTHERS ABOUT WHAT OUR PLAN IS.
DAVID FABER: YOU KNOW, NELSON, ON THAT POINT, WITH ALL THE BACK AND FORTH IN TERMS OF WHETHER OR NOT YOU WILL GO ON THE BOARD, YOU MAKE THIS POINT, WELL I'M ONLY GOING TO BE ONE VOICE OF MANY. AT THE SAME TIME YOU SEEM TO BE MAKING SIGNIFICANT PROMISES TO SHAREHOLDERS THAT YOU WILL BE AN AGENT OF CHANGE.
PELTZ: I DON'T THINK I'VE DONE THAT. I DIDN'T SAY THAT I WAS MAKING PROMISES. I'M SAYING THAT I'M BRINGING IN A POINT OF VIEW INTO THE BOARDROOM WHICH MERITS REAL DISCUSSION AND REAL STUDY THAT'S WHAT I'M SAYING.
FABER: SO, THERES A POSSIBILITY THAT EVEN IF YOU DO GET ON THE BOARD, YOU WON'T BE ABLE TO DO ANYTHING?
PELTZ: THERES A POSSIBILITY, BUT MY TRACK RECORD SPEAKS FOR ITSELF THAT THINGS HAVE CHANGED.
FABER: YOU KNOW, THAT TRACK RECORD OF COURSE IS SOMETHING THAT IS NOW AT ISSUE, WITH
P&G SAYING IT'S NOT WHAT IT APPEARS. THEY TALK ABOUT THINGS, FOR EXAMPLE, IN PAST CAMPAIGNS YOU HAD A PATTERN OF INCREASING PRICES WHEN YOU GET ON COMPANY'S BOARDS, OR THE COMPANIES DO, TO THE DETRIMENT OF VOLUMES WHERE YOU HAVE GOTTEN ON THE BOARD.
PELTZ: WHAT THEYRE TALKING ABOUT IS TALKING ABOUT MONDELEZ.
FABER: YES.
PELTZ: WHEN COCOA PRICES GO UP, LET ME TELL YOU, YOU BETTER RAISE THE PRICE OF YOUR CHOCOLATE. THAT'S JUST THE WAY IT IS. EVERYBODY'S COCOA PRICES WENT UP. BUT AT MONDELEZ, WHAT HAPPENED AT MONDELEZ, WHEN I GOT ON THE BOARD, AND THAT WAS JANUARY '14, WE HAD COME OFF A YEAR WHERE MARGINS WERE 10 AND A FRACTION PERCENT ADJUSTING FOR THE COFFEE JV, THEY'RE NOW AT 16%. IRENE HAS DONE A MAGNIFICENT JOB IN RAISING THOSE MARGINS.
FABER: SO THE REVENUE GAINS AT MONDELEZ WERE DRIVEN BY PRICING.
PELTZ: NO. THEY WERE DRIVEN BY PRICING AND VOLUME.
FABER: AND MARGINS.
PELTZ: AND MORE ADVERTISING EXPENSE.
FABER: DO YOU THINK THAT'S SUSTAINABLE?
PELTZ: I KNOW IT'S SUSTAINABLE. AND I ALSO KNOW WHEN YOURE TRYING TO GAIN MARKET SHARE, YOU CONTINUE TO INCREASE YOUR ADVERTISING, YOU INCREASE YOUR R&D, AND IF YOU LOOK AT MONDELEZ, ADVERTISING AND R&D WENT UP AS A PERCENTAGE OF SALES. AND LOOK AT WHAT P&G DID LAST QUARTER, THEY DROPPED ADVERTISING $125 MILLION TO MAKE THE QUARTER LOOK GOOD. WHEN YOU ARE LOSING MARKET SHARE, IT'S A CARDINAL SIN TO REDUCE MARKETING EXPENSE.
CARL QUINTANILLA: SO YOU DONT THINK IT WAS ABOUT LACK OF RETURN IN DIGITAL OR ANYTHING THEY SAID ABOUT ADVERTISING ON FACEBOOK OR VARIOUS PLATFORMS?
PELTZ: LOOK, IF – I CAN'T ARGUE WHETHER IT WAS GOOD OR BAD ON DIGITAL. I KNOW DIGITAL IS WHERE IT'S HAPPENING TODAY. BUT I WILL TELL YOU, IF YOU FIND A PLACE WHERE MARKETING IS NOT DOING WELL, WHICH I ASSUME THEY'RE DOING EVERY DAY AND EVERY WEEK, BY ROADSIDE STANDS LIKE BURMA-SHAVE DID. BUT DON'T TAKE THE MONEY AND PUT IT IN YOUR POCKET.
CRAMER: NOW, I WANTED TO KNOW AGAIN, BECAUSE I WANT MR. TAYLOR'S CHARGES REFUTED, IF THAT'S THE CASE. HE SAID TO ME, WE'RE FOCUSED ON ONE THING, WHICH IS TO WIN THE PROXY CONTEST, BECAUSE WE'RE WORKING FOR SHARE OWNERS. NELSON PELTZ, IN ONE OF HIS FIRST MEETINGS I HAD WITH HIM AND JIM MCNERNEY, FORMER CEO OF BOEING, SAID DAVID, YOU'VE GOT TO GIVE ME SOMETHING FOR MY SHARE OWNERS.
PELTZ: I HAVE NO SHARE OWNERS, BY THE WAY. I HAVE NO SHARE OWNERS. I HAVE INVESTORS. I MANAGE MONEY. THERE ARE NO SHARE OWNERS. SO THAT QUOTE IS INACCURATE. OK. TOTALLY INACCURATE. LET ME TELL YOU WHAT HAPPENED AT THAT MEETING. OK? IT WAS AT THAT MEETING AND IT WAS MID-MAY. AND I ASKED OFFICIALLY FOR A BOARD SEAT NOW, I HAVE DONE THAT IN THE PAST ONCE OR TWICE, ASKED FOR A BOARD SEAT. AND MOST OFTEN I GOT ONE I NEVER GOT AN ANSWER AT THAT MEETING BECAUSE I WAS ONLY SITTING WITH TWO DIRECTORS. SO NORMALLY I WOULD HAVE EXPECTED THEM TO SAY "WE'LL POLL THE BOARD, CALL A MEETING. THE NEXT MEETING IS IN THREE WEEKS, WE'LL TAKE IT UP THEN." THOSE TWO DIRECTORS ON THEIR OWN SAID NO. THEY DIDN'T SAY LET'S GO OUT OF THE ROOM, JUST NO. I THINK THAT'S BAD GOVERNANCE IN AND OF ITSELF. THEN WHAT I DID, I THEN OFFERED TO MEET THE ENTIRE BOARD. SEVEN RETIREES SAID I WOULD LIKE TO MEET HIM IN WHOLE OR IN PART. I WOULD TRAVEL ANYWHERE IN THE WORLD TO MEET THEM. I WAITED – AND THEN I COULD SHOW THEM MY WHITE PAPER. THAT'S WHAT WE DO. WE SHARE OUR WHITE PAPER, TYPICALLY WITH MANAGEMENT AND THE BOARD IN SESSION AND THEN THEY CAN MAKE A DETERMINATION. AS YOU KNOW, THEY COMPLAINED THAT I WAITED UNTIL AFTER LABOR DAY TO PUT OUT MY WHITE PAPER. I OFFERED TO MEET WITH THE BOARD FOR THE SECOND HALF OF MAY, ALL OF JUNE, ALL OF JULY, AND ALL OF AUGUST, ASKED MANY TIMES THEY GAVE ME ONE NEW DIRECTOR, KEN CHENAULT, AND I SPOKE TO THE HEAD OF GOVERNANCE ON THE PHONE. AND SHE SAID HELLO AND GOOD-BYE. THAT WAS THE EXTENT OF THE DIRECTORS I MET. THAT'S WHY WE PRESENTED THE WHITE PAPER WHEN WE DID.
CRAMER: BUT MR. TAYLOR COMES BACK AND SAYS THERE WERE 16 MEETINGS BETWEEN YOU AND PEOPLE AT PROCTER, WHICH WOULD INDICATE A LOT OF CONVERSATIONS BEYOND.
PELTZ: 100%. IT WAS WITH TAYLOR, JOHN MULLER, AND SOME OF HIS GLOBAL LEADERSHIP TEAM. ABSOLUTELY. BUT THE ONLY ONE IN THE ROOM WHO COULD MAKE A DECISION ABOUT MY BOARD SEAT WAS DAVID TAYLOR, HE WAS ONE VOTE OF 11.
FABER: ON THIS SUBJECT, ABOUT THE TIMELINE AND THE MEETINGS AND ON THE NOT PARTICULARLY IMPORTANT SUBJECT OF HOW MUCH MONEY THEYRE SPENDING IN FEES TO DEFEND THEMSELVES, THERE SEEMS TO BE A DIFFERENCE OF OPINION TO PUT IT LIGHTLY. P&G ACTUALLY SAYS YOU'RE MAKING STUFF UP. WHEN YOU SAY THEY'RE SPENDING $150 MILLION ON FEES TO DEFEND THEMSELVES, AS YOU DID WITH SARA AND I LAST WEEK OR TWO WEEKS AGO, THAT'S COMPLETELY NOT TRUE, AND THIS IS THEIR QUOTE TO ME, THEY DON'T WANT SOMEBODY ON THE BOARD WHO MAKES STUFF UP.
PELTZ: THEY MAKE STUFF UP BY TELLING YOU THAT EVERYTHING IS PEACHY CREAM AND EVERYTHING IS MOVING IN THE RIGHT DIRECTION. AND UNDERSTAND I LIKE DAVID TAYLOR I LOOK FORWARD TO WORKING WITH DAVID TAYLOR AND I'M NOT ASKING FOR DAVID TAYLOR TO STEP DOWN. BUT I WOULD ASK DAVID TAYLOR TO BE FORTH RIGHT. THEY PUT OUT DAVID TAYLOR'S RECORD AND SAY HOW WONDERFUL THINGS ARE EARNINGS ARE DOWN SINCE '15. SALES, 3% GROWTH CUMULATIVELY OVER HIS TENURE. TRADITIONAL PEERS, 6% DOUBLE, AND 7% FOR THE ENTIRE MARKETPLACE. OK? THEYRE LOSING MARKET SHARE IN ALL FIVE SEGMENTS.
FABER: THEY HAVE STARTED TO PUT OUT A SLIDE. I DON'T KNOW IF WE HAVE IT. ABOUT YOUR PERFORMANCE, TALKING ABOUT YOUR TOTAL SHAREHOLDER RETURN VERSUS THEIR OWN. I DON'T KNOW IF WE HAVE IT OR NOT AVAILABLE. I THINK SOME OF IT IS THERE. THERE IT IS. WHAT ABOUT THAT, NELSON?
PELTZ: I HAVE NEVER SEEN THAT SLIDE.
FABER: -- RELATIVE TO THE S&P YOU'RE DOWN 5%, ONE WEEK POST -- THEYRE GOING AFTER YOU TO TRY TO BUILD UP THE SHORT-TERM PERFORMANCE OF MR. TAYLOR, UNDER HIS LEADERSHIP AT THIS POINT SAYING, YOU KNOW WHAT? YOU GET A BIG POP WHEN YOU GET INTO ONE OF THESE STOCKS, OVERTIME, THEIR ANALYSIS SHOWS THAT THERE'S LONG-TERM UNDER-PERFORMANCE OF THE COMPANIES YOU'RE INVOLVED WITH.
PELTZ: IF YOU LOOK AT MY WHITE PAPER, AND MY WHITE PAPER HAS BEEN LAWYERED TO DEATH. OK. IT SAYS THAT EVERY TIME I GET ON A BOARD, AND MY AVERAGE LENGTH OF STAY ON A BOARD IS SEVEN YEARS AND GROWING, SO THIS SHORT-TERM NONSENSE DOESN'T HOLD, THE TSR AND THE EARNINGS BOTH OUTPERFORM THE S&P ANNUALLY BY 8%. THOSE ARE THE FACTS. I DON'T KNOW WHAT TIME FRAME THEY'RE PICKING. THEY COULD HAVE PICKED A BAD WEEK. DAVID, YOU KNOW WHAT THEY CAN DO YOU WITH NUMBERS. BUT DAVID, WHAT I JUST TOLD YOU IS HARD FACT.
CRAMER: WELL THIS IS A SLIDE PROCTER IS GIVING ME, IT SHOWS WHEN YOU'RE ON THE BOARD, IS 4%. IT IS SOMETHING THAT I FEEL LIKE IF TRUE, IT'S IMPORTANT.
PELTZ: THEY PICKED A TIME FRAME OF NOVEMBER 1st.
CRAMER: RIGHT.
PELTZ: 2015. I'M ON THESE BOARDS AN AVERAGE OF SEVEN YEARS. THE AVERAGE OF THOSE SEVEN YEARS, THEY GROW 8% ABOVE THE S&P ANNUALLY AND THE EARNINGS GROW OVER 8% OF THE S&P AVERAGE. THAT'S AVERAGE. BELIEVE ME, IF I COULD GET ALL THOSE THINGS GO RABIDLY QUARTER BY QUARTER, I MIGHT NOT BE SITTING HERE. BUT THE FACT IS THAT IS WHAT HAPPENS. NOW LET ME TELL YOU FROM NOVEMBER 1ST. 2015. THE YEAR PRIOR TO DAVID COMING ON BOARD, THE STOCK WAS DOWN 31% VERSUS PEERS. 31%. OK. THAT'S HAPPENED. HE CAME IN AT TROUGH. THE STOCK THEN WENT UP FROM THEN UNTIL NOW, UP 24%. PEERS WENT UP 22%. SO HE RECAPTURED 2% OF THE 31%. AND HALF OF THE 24% IS WHEN WE WERE BUYING THE STOCK. OK, BUT OVERALL MARKET SHARE DOWN IN ALL FIVE SEGMENTS. EARNINGS DOWN FROM 2015 TO JUNE 2017.
CRAMER: WELL, LETS – LET'S BACK UP FOR A SECOND THERE ARE CHARGES BACK AND FORTH NOW, NELSON. IT'S NO LONGER AS CONVIVIAL AS IT ONCE WAS.
FABER: OR AS IT SEEMINGLY WAS AT THE BEGINNING. BOTH SIDES SAYING WE WANT TO BE CIVIL. THAT'S WHAT THEY WERE TELLING ME.
CRAMER: THEY START OUT BY SAYING WE RESPECT NELSON, WE THINK HE'S A GOOD GUY. BUT THAT'S NOT ENOUGH. ITS NOT WHY, IT'S THAT THIS IS NOT THE CRITERIA ABOUT WHETHER YOURE A GOOD GUY.
PELTZ: I AGREE WITH YOU. I MAKE -- I HAVE CRIB NOTES HERE THIS IS WHAT THEY SAID ABOUT ME. I'M OUT OF DATE, WHICH IS CODE FOR I'M OLD. OK. THAT'S TRUE. I CANNOT DENY THAT. BUT I HAVE SIX MILLENNIALS AT HOME AND TWO GEN Z'S. AND I WILL MATCH THOSE NUMBERS WITH ALL OF THE P&G BOARD. AND I'LL SPOT THEM ONE IN EACH CATEGORY. OK. SO THEY GOT A TOUCHDOWN AND I'LL STILL BEAT THEM. OK. I'M DANGEROUS, WHICH WE DISCUSSED. I'M DISRUPTIVE - JIM, I'M NOT DISRUPTIVE. I SPEAK ME MIND. I DON'T THINK EVERY SINGLE VOTE ON A BOARD NEEDS TO BE UNANIMOUS. AND THAT'S WHAT EVERY BOARD STRIVES TO DO. AND IF EVERY DECISION IS UNANIMOUS, THEY SHOULD FIRE 11 DIRECTORS AND SAVE THE DIRECTOR'S FEES.
FABER: DO YOU HAVE –
PELTZ: I DIDN'T FINISH MY LIST.
FABER: I'M SORRY.
CRAMER: I DIDNT SAY HELLO, YOU CUT OFF THE LIST.
FABER: WHAT ELSE IS ON THAT LIST?
PELTZ: THEY SAID NO NEW IDEAS. I WROTE ALL THIS DOWN. NO NEW IDEAS WHICH IS LIKE A NEW HURDLE TO GET ON A BOARD, YOU GOTTA COME ON WITH A NEW IDEA. THEN THEY SAID IT WAS BAD IDEA. THEN THEY CHANGED HORSES ONE MORE TIME AND SAID THEY'RE ALREADY DOING IT. THEY
RE ALREADY DOING THE BAD IDEA. THAT'S IT. I STILL LOVE DAVID. I LOOK FORWARD TO WORKING WITH HIM.
QUINTANILLA: WHEN THIS PROCESS BEGAN, DID YOU EXPECT IT TO BE THIS HEAVY OF LIFT OR THIS PERSONAL?
PELTZ: WELL, I DON'T TAKE THIS PERSONALLY. NOT AT ALL. IF I TOOK THIS PERSONALLY, I WOULDN'T HAVE BEEN ABLE TO WORK AT HEINZ AND WORK SO WELL WITH THAT BOARD. I WOULDN'T HAVE BEEN ABLE TO WORK WITH ED BREEN. ED BREEN WAS ON THE BOARD OF DUPONT, HE AND TRIAN ARE SO CLOSE. WE HAVE BEEN UNDER CA WITH DUPONT SEVERAL TIMES. DAVID BROUGHT IT UP THE LAST TIME, I LOST A BATTLE WHEN WE HAD A HUMONGOUS WIN. I HOPE THAT DOESNT HAPPEN HERE. I REALLY WANT TO WORK WITH DAVID. AND I WANT DAVID TO MAKE HIS NUMBERS.
FABER: YOU'RE ON FOUR BOARDS ALREADY. I BELIEVE RIGHT NOW.
PELTZ: YEP.
FABER: YOU THINK YOU CAN ADD A FIFTH AND BE EFFECTIVE?
PELTZ: NO, I SAY IN MY WHITE PAPER I WILL GET OFF AT LEAST ONE AND MAYBE TWO IF I WIN THIS PROXY FIGHT. SO, THAT'S – I SAID THAT IN WRITING.
FABER: NELSON, WILL YOU STICK AROUND FOR US? WE WANT TO TAKE A QUICK BREAK, PAY A COUPLE OF BILLS.
CRAMER: HI, NELSON, HOW IS IT GOING?
PELTZ: HEY, JIMMY.
QUINTANILLA: WE WILL GET THE OPENING BELL AND MORE WITH NELSON PELTZ AFTER A SHORT BREAK.
CRAMER: NELSON PELTZ WELCOME BACK. TALKING ABOUT THE PROXY FIGHTWITH PROCTER & GAMBLE. WHEN I HAD MR. TAYLOR ON, HE POINT BLANK SAID TO ME THAT SOMETHING YOU CHARGE, WHICH IS THAT -- SOMETHING YOU SAID, WHICH IS THAT YOU SPOKE WITH 13 OUT OF 13 OF THE IMPORTANT PEOPLE, CHAIRMEN, DIRECTORS. THEY DID NOT HAVE ANYTHING BUT GOOD THINGS TO SAY ABOUT YOU. HE SAID HE TALKED TO BOARD MEMBERS, DIRECTORS, CEOs, AND HE FELT POINT BLANK THAT THEY DIDN'T HAVE POSITIVE THINGS TO SAY ABOUT YOU. SO THIS IS A DIRECT CONTRADICTION. I NEED TO GET A RESPONSE FOR WHAT MR. TAYLOR SAID.
PELTZ: OKAY. WE'RE TALKING FACTS NOW, JIM.
CRAMER: OKAY.
PELTZ: I HAVE SERVED UNDER 13 CHAIRMAN AND CEOs. SOME MEN AND WOMEN HAD BOTH TITLES SOME HAD SPLIT TITLES. 13 IN TOTAL. WITHIN TWO OR THREE DAYS AFTER THEY MADE THAT STATEMENT, WE THEN CALLED AND WROTE ALL 13. NOT 12 OF 13, BUT ALL 13 HOPING THEY WOULD SAY WE SAID GREAT THINGS ABOUT YOU YOU KNOW WHAT THEY SAID? THEY SAID NO ONE FROM P&G CONTACTED THEM AT ALL. NOW, THAT'S WHAT THEY SAID. AND, AND HAVE THEY -- COULD THEY HAVE SPOKEN A SPECIFIC DIRECTOR WHOSE NOSE MIGHT HAVE GOTTEN OUT OF JOINT? POSSIBLE. BUT THE CHAIRMAN AND THE CEOs AT THESE COMPANIES ARE THE PEOPLE WHO COUNT MOST OF ALL, AND ALL 13 OF THEM HAVE SAID THEY HAVE NOT HEARD AS OF 24 TO 48 HOURS AFTER THAT STATEMENT FROM ANYBODY FROM P&G.
CRAMER: SO IT'S NOT ABOUT THAT THEIR FEAR RETRIBUTION, IT'S THAT THEY WEREN'T CALLED.
PELTZ: THEY WEREN'T CONTACTED. IT'S NOT LIKE I SAID DID YOU SAY ANYTHING BAD ABOUT ME? THEY SAID NOBODY CONTACTED ME. NOW I WANT TO CORRECT, THIS SLIDE. OK. THEY'RE ALREADY APPLAUDING ME HERE.
CRAMER: EARLY RETURNS.
QUINTANILLA: THIS IS THE OPENING BELL.
PELTZ: THANK YOU – THANK YOU. ANYWAY.
QUINTANILLA: REALLY QUICK NELSON, LET'S JUST MENTION, AT THE BIG BOARD DOWN HERE, IT IS GLOBAL CITIZEN, A SOCIAL ACTION PLATFORM SEEKING TO END EXTREME POVERTY BY 2030. AND OVER AT NASDAQ, IT'S CHILDREN'S PLACE, A CHILDREN'S SPECIALTY APPAREL RETAILER.
PELTZ: LET ME TELL YOU HOW DUPLICITOUS THIS SLIDE IS. OKAY. THIS SLIDE WEIGHTS BY MARKET VALUE THESE RETURNS. SO, MONDELEZ –
QUINTANILLA: LET ME SHOW IT TO THE CAMERA.
CRAMER: I'M SORRY I SPRUNG IT ON YOU.
PELTZ: THAT'S OKAY. THAT'S OKAY. MONDELEZ IS WEIGHTED 30 TIMES WENDY'S FOR THAT TIME PERIOD. OKAY. 30 TIMES. FROM NOVEMBER 1st, PICKING A RANDOM DATE THAT HAPPENED TO BE WHEN DAVID TOOK OVER. NOW, WHEN I BOUGHT MONDELEZ, IT WAS IN THE LOW 20s, EPS HAS GONE UP DOUBLE DIGITS, MORE THAN LOW DOUBLE DIGITS. EVERY SINGLE YEAR. ADVERTISING EXPENDITURES HAS GONE UP. R&D HAS GONE UP. OK, THAT SLIDE IS SO MISLEADING. WHATEVER CONSULTANT DID THAT FOR P&G, THEY OUGHT TO FIRE THAT CONSULTANT.
FABER: NELSON, THIS IDEA OF CREDIBILITY IS BECOMING MORE AND MORE IMPORTANT IN THIS DEBATE BETWEEN BOTH SIDES. AND I SHARED THEIR PERSPECTIVE EARLIER. THEY'RE COMING BACK ALREADY AND SAYING YOUR COMMENTS ABOUT THOSE MEETINGS, AND I KNOW WE GET INTO THE WEEDS HERE, WHICH I BELIEVE TOOK PLACE IN MARCH AND AFTER THAT, ARE NOT TRUE. THE IDEA YOU WERE SUMMARILY REJECTED BY P&G WITHOUT CONSIDERATION THE FULL BOARD. THEY SAY THE PROXY IS UNAMBIGIOUS AT THIS POINT, IN TERMS OF MR. TAYLOR HAD CONVERSATIONS WITH SEVERAL MEMBERS OF THE COMPANY'S BOARD REGARDING THE MEETING YOU HAD AT YOUR REQUEST BETWEEN MARCH 7, AND MARCH 17th. ON MARCH 17th, YOU AND ED GARDEN CALLED MR. TAYLOR. MR. TAYLOR TOLD MR. PELT ZTHE BOARD DID NOT THINK ADDING MR. PELTZ WAS APPROPRIATE AT THIS TIME. I DON'T WANT TO DWELL ON THIS, TOO MUCH, BUT IT GETS TO THE TOPIC OF CREDIBILITY.
PELTZ: BUT WE CAN KEEP DWELLING ON IT. OK. THE FIRST TIME I MET ANY DIRECTOR OTHER THAN DAVID WAS JIM MCNERNY. WE MET IN MID-MAY. THAT WAS IN KENTUCKY, THEIR CHOICE, NOT MINE. OK. AND THAT'S WHEN THEY TOLD ME IMMEDIATELY THERE WAS NO BOARD SEAT FOR ME. THAT WAS THE FIRST TIME I OFFICIALLY REQUESTED A BOARD SEAT. I THEN, TO REPEAT MYSELF, OFFERED TO MEET THE ENTIRE BOARD SEPARATELY OR IN ITS ENTIRETY FOR THE NEXT 3 1/2 MONTHS. I OFFERED TO MEET MR. MCNERNY IN BERLIN, I OFFERED TO MEET HIM IN LONDON. I OFFERED TO MEET THEM ANYWHERE -- WHEN I WAS IN CHICAGO. EVERYBODY'S DANCE CARD WAS FULL FOR THE ENTIRE SUMMER. OK. THAT'S HOW INTERESTED THEY WERE IN HEARING OUR PLAN.
FABER: SEEMS TO ME THEY SAY WE TALKED TO THE BOARD, YOU DIDN'T, BUT THEY DID, THEY BROUGHT IT TO THE BOARD, THE BOARD RESPONDED TO MR. TAYLOR.
PELTZ: I LIKE TO CARRY MY OWN MESSAGES, NUMBER ONE. NUMBER TWO, AND NOW THEY COMPLAIN THAT THEY DIDNT GET THE WHITE PAPER IN TIME. IVE ALREADY EXPLAINED THAT TO YOU. WE GIVE THE WHITE PAPER AT APPROPRIATE TIME WHEN WE MEET THE BOARD.
QUINTANILLA: FOR OUR VIEWERS WHO ARE TRYING TO CATCH UP ON THE ARGUMENTS YOU MADE IN THE PAST ABOUT P&G, YOU TALKED ABOUT BLOATED BRANDS THAT ARE NOT NIMBLE ENOUGH AS SMALLER BRANDS HAVE EMOTIONAL CONNECTIONS TO CONSUMERS. IS THERE ONE YOU HOLD UP AS A MODEL
PELTZ: YEAH. I'LL GIVE YOU ONE THAT SC JOHNSON JUST BOUGHT TWO DAYS AGO METHOD SOAP.
QUINTANILLA: OF COURSE
PELTZ: MY HOUSE, YOUR HOUSE. MY MILLENNIALS THEY GOT THEM IN THEIR HOUSE. WHY -- THE LAST TIME I LOOKED, P&G IS IN THE SOAP BUSINESS, RIGHT?
QUINTANILLA: YES.
PELTZ: I WOULD BUY METHOD SOAP IF I WAS IN CHARGE AT P&G. BUT IT DOESN'T WORK AT P&G. YOU KNOW WHY IT DOESN'T WORK AT P&G? THEY ARE ONLY ABOUT GLOBAL BRANDS, ONE SIZE FITS ALL. AND THAT WAS GREAT IN THE 80s AND 90s TODAY, AS YOU SAID, THE WORLD HAS CHANGED. THE MILLENNIALS WANT THESE LITTLE BRANDS, THESE LOCAL BRANDS THAT THEY HAVE AN EMOTIONAL ATTACHMENT TO. THAT THERE IS A VALUE PROPOSITION. IT'S GOOD FOR THE ENVIRONMENT. GOOD FOR THEIR BODY BECAUSE IT'S NATURAL. AND THAT MAKES IT HARDER. AND THAT MEANS YOU HAVE TO STEP INTO THIS CENTURY AND YOU HAVE GOT TO GIVE THE CUSTOMERS WHAT THEY WANT, NOT WHAT YOU WANT TO GIVE THEM. AND WHAT THEY DID IS THEY DOUBLED DOWN ON GLOBAL BRANDS. THEY SOLD 100 BRANDS. 100 BRANDS, SMALL BRANDS. THOSE BRANDS, EVERY ONE OF THEM WAS BOUGHT FOR THE FUTURE OF P&G. AND THEY SOLD THEM ALL BECAUSE THEY COULDN'T MANAGE THEM.
CRAMER: OK. THEY'RE TALKING ABOUT R&D NOW YOU HAVE SAID POINT BLANK YOU AREN'T GOING TO CUT R&D. MR. TAYLOR SAYS THERE'S CORPORATE R&D AT THE TOP THAT'S PROVIDED A LOT OF INNOVATION AND THEYRE NUMBER ONE IN A LOT OF CATEGORIES BECAUSE OF THAT CORPORATE R&D, AND THAT YOU WOULD ELIMINATE THAT.
PELTZ: THAT'S NOT TRUE. THAT'S JUST NOT TRUE. THERE MIGHT BE UPSTREAM R&D THAT CONTINUES TO BELONG IN CORPORATE. WHAT WE ENVISION, JIM, IS THREE GBUs, GLOBAL BUSINESS UNITS, NOT TEN OF THEM. ALL THE SALES PEOPLE REPORT INTO THOSE GBUs, ALL THE FUNCTIONS REPORT INTO THE GBUs THERE'S REAL ACCOUNTABILITY. THE MATRIX IS GONE. AND THE MATRIX – THE SYNONYM FOR MATRIX IS COMPLEXITY. AND COMPLEXITY KILLS MARGINS AND KILLS SALES GROWTH.
CRAMER: I DO JUST WANT TO STEP BACK FOR A SECOND. THIS BOARD IS NOT A LIGHTWEIGHT BOARD. WOULD YOU AGREE WITH ME ON THAT?
PELTZ: NOPE. VERY RESPECTABLE.
CRAMER: MR. BLAKE FROM HOME DEPOT.
PELTZ: UNBELIEVABLY SO.
CRAMER: SO, WHY DO YOU THINK THAT THEY HAVE SET CRITERIA THAT THEY THINK, YOU KNOW, FRANKLY YOU DON'T FIT GIVEN THE FACT THAT THESE ARE OPEN MINDED PEOPLE AND WE ALL THINK HIGHLY OF THEM.
PELTZ: I AGREE. IF YOU LOOK AT PAGE NINE IN MY BIG BOOK, OK. YOU WILL FIND A LIST OF EVERY DIRECTOR, HIS TENURE AND TWO COLUMNS. ONE COLUMN IS PEER TSR. ONE COLUMN IS P&G TSR. AND EVERY SINGLE DIRECTOR'S NUMBER IS SIGNIFICANTLY NEGATIVE VERSUS THE PEER. AND SOME GO BACK 16 YEARS. THE ONLY ONE WHO IS POSITIVE IS MS. CHANG WHO JUST GOT ON A FEW MONTHS AGO. EVERY OTHER DIRECTOR IS NEGATIVE.
FABER: NELSON, TO WRAP UP, IF YOU DO WIN THIS PROXY CONTEST, AND IT'S GOING TO BE A TIGHT ONE, I WOULD THINK. A LOT DECIDED BY RETAIL AUDIENCE ONE REASON WHY IT'S A GOOD THING TO COME ON CNBC. WHAT DO YOU PUT YOUR CHANCES OF SUCCESS AT OF WORKING WITH THIS BOARD TO GET DONE WHAT YOU'RE TALKING ABOUT?
PELTZ: VERY HIGH.
FABER: WHY?
PELTZ: BECAUSE I'VE DONE THIS SO MANY TIMES BEFORE I HAVE NOT WALKED INTO THESE BOARDROOMS WHERE THERE WAS A POPPING OF CHAMPAGNE CORKS BUT AT THE END OF THE DAY SOME OF MY NEWEST AND CLOSEST FRIENDS WERE MADE IN THESE BOARDROOMS. AND BECAUSE, WHEN WERE ALL ON A BOARD TOGETHER WE UNDERSTAND WERE THERE TO REPRESENT THE SHAREHOLDERS, NOT MANAGEMENT, NOT EGOS, BUT THE SHAREHOLDERS, THAT'S WHAT WE'RE THERE TO DO. AND THAT'S MY REMINDER WHEN I COME IN THE BOARDROOM.
FABER: WELL THANK YOU, NELSON. WE CERTAINLY APPRECIATE YOUR WILLINGNESS TO TAKE A LOT OF TIME WITH US THIS MORNING.
PELTZ: VOTE WHITE.
CRAMER: GOOD BYE, NELSON
PELTZ: GOOD TO BE WITH YOU, JIMMY.
About CNBC:
With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, and CNBC World, CNBC is the recognized world leader in business news and provides real-time financial market coverage and business information to more than 409 million homes worldwide, including more than 91 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 15 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 7:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC at night features a mix of new reality programming, CNBC's highly successful series produced exclusively for CNBC and a number of distinctive in-house documentaries.
CNBC also has a vast portfolio of digital products which deliver real-time financial market news and information across a variety of platforms including: CNBC.com; CNBC PRO, the premium, integrated desktop/mobile service that provides live access to CNBC programming, exclusive video content and global market data and analysis; a suite of CNBC mobile products including the CNBC Apps for iOS, Android and Windows devices; and additional products such as the CNBC App for the Apple Watch and Apple TV.
Members of the media can receive more information about CNBC and its programming on the NBCUniversal Media Village Web site at http://www.nbcumv.com/programming/cnbc.
For more information about NBCUniversal, please visit http://www.NBCUniversal.com.