Mondelez CEO Irene Rosenfeld has the ill-fated distinction of being one of the business world’s foremost experts when it comes to dealing with activist investors.
Activists circled Kraft in 2011 as she made the decision to break the company into two. Now as the head of the resulting $34 billion snack business whose brands include Oreo, Ritz, and Trident, Rosenfeld is feeling the pressure again. Hedge fund manager Bill Ackman announced in August that he had taken about a 7.5% stake in Mondelez (MDLZ), and the agitations of Trian Fund Management’s Nelson Peltz resulted in him taking a seat on the board.
So what’s her advice as someone who’s well versed in dealing with activists? Engage all shareholders. “We have to listen to what they have to say, and in the case of activists, one chooses not to engage at their peril,” she said at Fortune’s Most Powerful Women summit on Tuesday.
But while activists are vocal and have strong positions, Rosenfeld added, sometimes the “nature of their holdings does not justify the loudness with which they speak” and, in many cases, they don’t know the companies they target all that well.
In the case of Peltz, Rosenfeld said that he had a great deal of experience in the consumer goods industry and that he had more operating experience than many other activists. That’s one of the reasons why the company gave him a board seat—a decision Rosenfeld has said was one of her most difficult and important. She noted that he’s been a “highly constructive” director.
When asked why there aren’t any female activists, Rosenfeld told Fortune‘s Pattie Sellers, “Women perhaps might choose to do things in a slightly less public way, and they might get them done faster.”
Rosenfeld noted that she believes one of the reasons Mondelez has been a target of activists is simply because it’s a good investment. The company has the unusual portfolio of getting 85% of its revenue from snacks and 40% from emerging markets. “I’m not surprised to see that it’s garnered the attention of prominent investors,” she said.
Rosenfeld added that she watched with interest the battle that Ellen Kullman at DuPont (DD) fought against Peltz and “cheered her on” when she won her proxy fight. But in the case of Mondelez, she noted, it made sense to accept Peltz rather than push back, because he was aligned with the company’s goals. “Each company has to look at the circumstances through their own lens,” she said.
Both Peltz and Ackman have pressured Mondelez to cut costs, which Rosenfeld said the company has been doing, as a strong dollar has meant its products are more expensive in local currencies. Input costs have also risen as commodity prices for ingredients like cocoa have increased.
But cutting costs has to be sustainable, Rosenfeld warned. Sometimes companies “get themselves into a jam and cancel the budget for the following two quarters,” she said. “That’s not very productive.” She added that Mondelez was an early adopter of zero-based budgeting, which has allowed the company to shift resources to efforts like marketing and innovation.
In Rosenfeld’s view, one of the most overlooked trends in the food industry is e-commerce, which she said makes up only 2% of snack sales today. Mondelez is working on online-only products, such as customizable goods like Oreos for weddings. Right now, she said, it’s a $100 million business, but the company is trying to build it into a $1 billion operation.
In addition to e-commerce, Rosenfeld said Mondelez is focused on improving the overall health profile of its products by using lighter filling and whole grains and taking out sodium and saturated fats. She said that by 2020, she wants half of the company’s products to be focused on health and wellness.