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Tucker: Shareholders keep eye on DuPont proxy fight

Posted: January 15, 2015 9:32 a.m.
Updated: January 16, 2015 1:00 a.m.

Though it’s been many years since DuPont Co. maintained a sizeable presence here in Kershaw County, there are no doubt hundreds -- perhaps thousands -- of May Plant retirees who still hold the company’s stock in their retirement fund and depend on it to maintain their standard of living.

They, along with so many people here who hold a special fondness for DuPont because of all it contributed to this community, are no doubt interested in the bruising proxy fight being waged by a dissident shareholder group which is seeking four seats on DuPont’s board of directors in an attempt to change the direction of the company.

Proxy fights -- in essence, battles for control of a company -- are combative affairs which are nearly always congested with outsized egos and curdled emotions.

They generally occur in companies which are underperforming, which is not the case with DuPont during the last few years. Since 2009, under the leadership of CEO Ellen Kullman, DuPont’s stock has risen 190 percent vs. 126 percent for the S&P Index, a broad-based basket of stocks often used to measure market performance.

Trian Fund Management, an investment firm headed by New Yorker Nelson Peltz, has amassed a significant block of DuPont stock. It’s initiated the proxy fight, contending DuPont has a bloated corporate bureaucracy, a charge leveled at the company often for many decades.

Peltz contends DuPont should be split up, with one company focusing on agriculture and nutrition, and another centered around industrial and consumer materials such as Kevlar.

He claims such a move would double the company’s stock price within a year. Some people obviously believe him, as he has the ear of the California State Teachers’ Retirement System, a huge investor which holds many shares.

Trian wants to toss out four company directors and replace them with its own choices, one of them being Peltz. That, of course, would significantly affect board decisions regarding senior management and company direction.

Peltz doesn’t have a lock on winning this battle. Large corporations such as DuPont have traditionally held an advantage in proxy fights because they’re the establishment and have in many cases earned the respect of their shareholders.

But it’s becoming more and more common for dissidents to win such brouhahas.

There are many hefty DuPont investors who believe the company is headed down the right path; they want to see the company’s present directors return to the boardroom and maintain the current business strategy. So a battle royal is shaping up.

Some analysts say stockholders will benefit no matter who wins the April proxy fight, with a leaner, meaner company left to continue in a demanding business world.

One thing’s for sure: whomever wins will come out better than the last major proxy fight of interest here in Kershaw County.

Back in the early 1990s, two rough-and-tumble New York real estate moguls -- many considered them more than a bit rough around the edges for staid Camden -- staged and won a proxy fight against Builders Transport, a trucking company which had moved its headquarters here from Savannah, Ga. a few years earlier.

David Walentas and Stan Dinstein blew into Camden, upsetting all sorts of teacarts. By the time the smoke had cleared, Builders Transport was out of business and Walentas and Dinstein were back in New York, leaving lots of dollars and shredded feelings in their wake.

Dinstein has since died, while Walentas has continued to make millions of dollars, primarily in Brooklyn real estate development.

The Builders Transport deal, while painful for Camden, was small potatoes compared to DuPont. And you can bet there will be lots of Kershaw County eyes cast upon Wilmington, Del., when it’s time for the votes to be counted this spring.

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