Investor: Heinz not marketing adequately


Published: Tuesday, August 1, 2006 at 6:01 a.m.
Last Modified: Tuesday, August 1, 2006 at 12:00 a.m.
PITTSBURGH - Billionaire investor Nelson Peltz and his Trian Group accused H.J. Heinz Co. management on Monday of not adequately marketing its brands and slammed the 12-member Heinz board as a "clubby, caretaker board" that has not held Heinz management accountable to shareholder interests.
"We want to invest in good companies where management hasn't gotten it right on the income statement, and Heinz is a perfect example of that," Peltz said in a forum arranged by the influential Institutional Shareholder Services, which gives proxy voting and corporate governance advice to institutional shareholders.
Heinz officials countered that a slate of proposed board members backed by Trian, among them golfer Greg Norman, was not qualified for the job and would not act independently. And they argued that a drawn-out proxy fight would hurt the company by making it hard to attract and retain qualified board members.
"As we look at Trian, we see no new ideas, no inclination to work collaboratively with this board or management, a plan that we think would damage the company, a group of nominees that look like five bodies with one head that seem intent on taking control without paying a premium for it, and a track record of shareholder lawsuits," said Thomas Usher, presiding director and chairman of the governance committee at Heinz.
Peltz and Trian are engaged in a fierce proxy battle and hope the five board members they back will implement an aggressive growth plan at Heinz.
Heinz has defended its own recipe for growth and charged that the Trian Group, its second-largest shareholder, is merely trying to turn a quick profit and that its plans threaten to cripple the 137-year-old company.
Peltz disputed claims by Heinz that the board members proposed by Trian could attempt what Heinz has said amounts to a hostile takeover. As a minority slate, the Trian candidates would rely only on the power of their arguments to cause change, Trian officials said.
"Our involvement on this board is going to create an entrepreneurial spirit that I don't think exists today," Peltz said. "We really care about this company. We want to see it prosper. We want to see it grow."
Heinz took out full-page ads Monday in The Wall Street Journal, The New York Times and two Pittsburgh newspapers urging shareholders to reject the board members proposed by Peltz and Trian.
"Heinz and everything our company stands for is under attack by a corporate raider," said Heinz spokesman Michael Mullen.
With the exception of the disruption caused by Peltz and his group, Heinz is on track to meet its goals, company officials said.
"We have worked long and hard to get the company to this point, and we just don't want any further distraction," said Arthur Winkleblack, chief financial officer at Heinz.
Less than three weeks remain before the company's Aug. 16 annual shareholder meeting, where Heinz investors will vote for the current slate of directors or those proposed by Peltz and his team.
Also on Monday, Heinz announced it has retained recruitment firm Spencer Stuart to find two new independent board directors. Heinz said earlier in the month that it will add two seats to its board, bringing the total number of board members to 14. The new members, who are scheduled to assume their positions in November, will have consumer marketing and capital markets expertise, Heinz said.

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