By David Benoit And Lauren Pollock
DuPont Co. named two new directors in a board revamp that
excludes nominees of Nelson Peltz's Trian Fund Management Corp.,
ratcheting up the tension in a battle with the activist
investor.
The chemical giant said Edward Breen, chairman of Tyco
International PLC, and James Gallogly, a former chief executive of
LyondellBasell Industries NV, would join its board effective
immediately. DuPont also revealed it had rejected Mr. Peltz and two
of Trian's three other board nominees in its proxy fight with the
company.
In an attempt to settle the fight over the board of the Delaware
chemicals conglomerate, DuPont said it offered on Wednesday to
consider one of Trian's director nominees along with Messrs. Breen
and Gallogly, according to a letter to Mr. Peltz the company
released Thursday.
"Unfortunately, you insisted--while refusing to hear the details
of our proposal--that you will not consider any proposal that does
not include you personally being added to the DuPont Board,"
DuPont's letter said.
DuPont judged John Myers, the former CEO of GE Asset Management,
part of General Electric Co., to be Trian's one qualified nominee,
according to people familiar with the matter.
Trian called news of DuPont's new directors "another positive
development since Trian's involvement with DuPont began in March
2013"; however, the fund said "there is much more value to be
unlocked," noting up to $4 billion in excess corporate costs, among
other concerns. For those reasons, the fund said it would continue
to push its nominees to join DuPont's board.
DuPont's conglomerate structure and diverse business portfolio
have come under scathing attack from Trian over the past 18 months,
and the activist said last month that it would seek four seats on
DuPont's board. Trian has questioned management and the board's
supervision of the company, even amid strong performance for its
stock, which has more than doubled in the past five years and
outperformed the S&P 500 index.
DuPont shares rose 3.1% Thursday to $76.
DuPont said it reviewed all of Trian's proposed nominees and met
with Mr. Peltz on Wednesday in Chicago to try to reach a
settlement, according to the letter, signed by Chief Executive
Ellen Kullman and Alexander Cutler, the lead independent director.
The letter also again rejected breaking up the company, a step
Trian has advocated.
Trian's other two nominees are Arthur Winkleblack, former chief
financial officer of H.J. Heinz Co., and Robert Zatta, acting CEO
and CFO of chemical company Rockwood Holdings Inc.
Trian has argued the company's share value could effectively
double if it split itself into three--with one business in
agriculture and nutrition, another in industrial materials and a
third for performance chemicals, which produces materials that go
into things such as nonstick frying pans and house paint. DuPont is
in the process of spinning off the performance-chemicals
business.
DuPont has fired back that its board and Ms. Kullman are already
reshaping the company and performing well. Several companies have
added independent board members in the midst of activist fights of
late, which can serve as a way to appease the investors and defuse
the battles.
Some DuPont shareholders and other observers have previously
given the company high marks, but also left open the possibility
they would side with a move to get fresh blood on the board.
Shareholders will now vote on whether the revamped board is enough
or whether they will still want Mr. Peltz and his slate.
Trian, in its release Thursday, said, "While DuPont frames
Trian's insistence that Nelson Peltz be added to the board as a
negative, we believe fellow stockholders want our nominees on the
board, specifically Mr. Peltz."
Mr. Breen has experience with corporate breakups, which could
bolster an argument by DuPont that it is sufficiently considering
the possibility of one and doesn't need the added supervision of
Mr. Peltz and others. Mr. Breen was CEO of Tyco International from
2002 to 2012, during which time he oversaw two breakups of the
company, resulting in the spinoffs of Covidien PLC, TE Connectivity
Ltd. and ADT Corp. and the merger of Tyco Flow Control with
Pentair, DuPont said.
For his part, Mr. Gallogly led LyondellBasell through bankruptcy
and a restructuring at the chemical company that cut its staff by
20%. LyondellBasell exited bankruptcy in less than a year and is
now the third-largest independent chemical manufacturer in the
U.S., DuPont said.
The appointments come as two current directors, Curtis Crawford
and Richard Brown, leave the DuPont board to eventually serve as
directors at Chemours Co., the performance-chemicals business that
is being spun off.
Jacob Bunge and George Stahl contributed to this article.
Write to David Benoit at david.benoit@wsj.com and Lauren Pollock
at lauren.pollock@wsj.com
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