By David Benoit And Saabira Chaudhuri
Bank of New York Mellon Corp. confirmed it giving a board seat
to activist investor Trian Fund Management LP.
The settlement comes just days before Trian would have had to
nominate directors publicly ahead of the annual shareholders
meeting next spring.
Ed Garden, Trian's co-founder and chief investment officer, is
joining BNY Mellon's board immediately, the company said in a news
release Tuesday. With the addition of Mr. Garden, the board expands
to 14 members from 13.
Mr. Garden will join the board's human resources and
compensation committee and its risk committee. He also will be
included on BNY Mellon's slate of nominees for election at the
company's 2015 annual meeting.
Trian, which disclosed a roughly 2.6% stake in the 230-year-old
bank in June, hasn't made any public demands but has privately
urged the bank to cut costs, according to people familiar with the
matter.
Trian, a $10 billion investment fund founded by Nelson Peltz,
Peter May and Mr. Garden in 2005, is known for seeking board seats.
With BNY Mellon, the firm now has had seats on seven of the 11
companies in which it has a stake currently. On Monday, Mr. Peltz
announced he is resigning from Legg Mason Inc.'s board of directors
to free himself up for other board work.
Trian is one of a few activists willing to wade into the
complicated, heavily regulated banking sector. A "custody bank,"
BNY Mellon safeguards $28.3 trillion in assets for money managers,
companies and other clients, performing administrative functions on
behalf of other banks and corporations. It is also an investment
manager, with $1.6 trillion of assets under management.
In 2011, Trian had pushed BNY Mellon rival State Street Corp. to
cut costs.
Investors have been keeping a close eye on BNY Mellon's
expenses, which in the third quarter climbed despite a variety of
cost-cutting measures. The bank in October laid out a plan to cut
$500 million in expenses by 2017, targeting investment services,
operations and technology.
"We have taken and are continuing to take very aggressive
actions to improve our earnings and margins, no matter what the
environment that we're operating in," Chief Executive Gerald
Hassell told investors in October.
Trian has expressed support of those plans and targets, the
people said.
The stock is up 13% this year, besting the KBW Bank Index's 3.4%
gain. But over five years, the bank trails the index.
Some of BNY Mellon's largest shareholders believe that the
company needs to cut costs more aggressively, according to CLSA
analyst Mike Mayo, who has called Trian's stake in BNY Mellon "a
spark in a flammable situation."
Mr. Mayo has said the 2007 merger of Pittsburgh's Mellon
Financial Corp. and Bank of New York didn't produce the benefits of
scale it should have. He has repeatedly suggested BNY Mellon spin
off its asset-management arm, but the bank has rejected that idea
several times. Trian had suggested a similar split at State Street
but ultimately dropped the idea.
Write to David Benoit at david.benoit@wsj.com and Saabira
Chaudhuri at saabira.chaudhuri@wsj.com
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