Group tries to name 5 to Heinz board
For the third time in about a year, high-powered investors are demanding better stock results from a top Pittsburgh corporation.
H.J. Heinz Co. disclosed Friday that a group led by billionaire Nelson Peltz – a group which includes professional golfer Greg Norman – wants to nominate five candidates to the company’s board of directors.
Trian Partners Master Fund L.P., a Cayman Islands limited partnership led by Peltz, notified Heinz of its intentions. The partnership wants to block the Heinz board from taking action that would prevent the outsiders from being named directors, according to a filing with the Securities and Exchange Commission.
Heinz spokeswoman Debbie Foster said Heinz practices an “open door” policy with all shareholders. She said company officials have held no discussions with Peltz.
Heinz shares jumped 88 cents, or 2.3 percent, to $38.23 on the New York Stock Exchange.
Peltz, 63, with a net worth of $1.1 billion, is CEO of Triarc Cos., parent of the Arby’s restaurant chain. Norman operates a Florida-based group of businesses.
In addition to Peltz and Norman, other board nominees are Peter May, Trian’s president; Edward Garden, a Trian portfolio manager and Peltz’s father-in-law; and Michael Weinstein, chairman of Inov8 Beverage Co. LLC.
“We have no comment on the Heinz situation,” Trian spokeswoman Ann Tarbell said.
Heinz’s share price has declined since CEO William Johnson arrived in 1998. In March that year, Heinz shares traded near $52, about 35 percent higher than the $38.23 price per share when the market closed yesterday.
In its SEC filing, Heinz pointed out that over the last three years it has refocused on its core brands. Its accomplishments include the $2 billion spin-off of pet food, tuna, private-label soup and baby food operations to Del Monte, and the return to shareholders of more than $1 billion in dividends and share buybacks, the company said.
Companies can benefit when investors take an active role, a Carnegie Mellon University professor said.
“These types of actions truly are not a bad thing,” said Jeffrey R. Williams, a professor of business strategy at the Oakland university’s Tepper School of Business. “It’s always true that these guys would not do this unless they saw an opportunity to make the company better. They have a vision for the company, to make the company’s pieces make more sense.”
Foster said Heinz has no rules in place to stop an outsider from joining the board.
That stands in contrast to the stance last year of generic drug manufacturer Mylan Laboratories Inc., which aggressively sought to head off corporate raider Carl Icahn. Mylan amended its bylaws to push back its annual meeting and move up the cutoff date for nominating directors.
Icahn wanted to stop Mylan’s efforts to buy King Pharmaceuticals Inc.
The King deal collapsed, primarily because the companies couldn’t agree on a new sale price following revelations that King had to restate 2 1/2 years of earnings. But Icahn’s presence certainly turned up the heat.
Earlier this year, Mellon Financial’s board of directors hired Robert Kelly as chairman, chief executive and president, replacing long-time executive Martin McGuinn. The impetus for change: Boston-based hedge fund Highfields Capital Management and its managing director, Richard Grubman.
Heinz isn’t the only food company in Peltz’s sights.
On Thursday, Peltz and fast-food purveyor Wendy’s International disclosed a deal in which the Dublin, Ohio-based chain will speed up the sale of its Tim Hortons coffee and doughnuts chain, consider selling its Baja Fresh Mexican Grill restaurants, and add three Peltz nominees to its board. In return, Peltz and Sandell Asset Management Corp. agreed to vote their shares in favor of Wendy’s board nominees.