Proctor & Gamble (NYSE:PG) fireworks may soon be going off. Long considered a marketing machine from which all others emulated or just copied they have attracted the attention of activist hedge fund owner Bill Ackman of Pershing Square. As in $2 billion dollars of interest. With his track record many already view P&G suspiciously.
Lets take a look at a few issues that probably attracted Pershing Squares attention.
Five members of the board (out of ten) are active serving CEO’s of major companies. It is highly unlikely that they have the time to really scrutinize P&G. Also serving CEO’s are unlikely to rock the boat and undertake lobbying campaigns to proactively change issues. They also fill nine of fifteen committee memberships on the board’s three key standing committees
Since Robert McDonald became CEO of P&G in July 2009, operating income has collapsed 12% from $15.2 billion in 2009 to $12.3 billion in 2012 EPS is also collapsing have fallen from $4.49 to $3.82 (down 15%) over the same time period. Clearly this is not creating wealth. Robert McDonald has announced a major restructuring and cost cutting program. but you have to wonder why it took so long.
In 2012, P&G insiders have sold over $38.5 million of shares. In fact, since the beginning of August, insiders have already dumped over $33 million worth of stock. Last year insider sales at Procter & Gamble totaled less than $3.7 million. Money does talk the loudest.
George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti