DuPont's CEO Ellen Kullman, who said on Monday she will soon step down.
Photograph by Mark Lennihan — AP
By Alan Murray
October 6, 2015

Dupont CEO (DD) Ellen Kullman won the battle, but lost the war. Her hard-fought victory in a proxy fight against activist Nelson Peltz was celebrated in corporate boardrooms around the country (she even got a standing ovation at the annual meeting when results were announced.) But her resignation five months later turns that victory upside down.

A few quick observations:

  • She was dumped. Kullman and the company are both doing their best to make this an amicable parting. But the fact she is leaving so abruptly – October 16 – suggests otherwise. The former high school basketball player told Fortune’s Steve Gandel earlier this year: “I give it 100% until the buzzer sounds.” The buzzer had clearly sounded. (Read Gandel’s excellent story on the proxy fight here.)
  • Peltz won. Acting CEO Ed Breen’s last act was to dismantle Tyco. At DuPont, he can be expected to push for same, which is what Peltz was advocating all along.
  • Activists won. Those who thought Kullman’s victory might mark a turning of the tide were wrong. All eyes now move to Peltz’s latest target, GE (GE) CEO Jeff Immelt, whose company has struggled more than DuPont since he took over 14 years ago.

But the most important stake in the DuPont battle is the role of large companies in driving society-improving innovations. I had the opportunity to talk with her about this at length on several occasions, and found her very compelling. (For example, see this conversation last year at the Council on Foreign Relations). Kullman passionately argued that the glue bonding the disparate parts of DuPont was science. The most important innovations, she said, were those at the intersection of different sciences. She fiercely defended the $2 billion her company spent each year on R&D, which the activists attacked. And she skillfully rebutted venture capitalist Vinod Khosla, when he argued all important innovations happen in start-ups. They don’t. Big companies like Dupont bring important skills and resources to the innovation table — which is why it has survived the last 214 years.

If, in the frenzied pursuit of short-term returns, investors force DuPont to pull back its commitment to scientific research, the company, the nation and the world will be worse off.

 

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