DuPont’s victory over Nelson Peltz won’t end corporate activism. But it may be a high water mark.
The headlines this morning are trumpeting Peltz’s defeat in what Bill George dramatically called the “battle for the soul of corporate America.” Let’s do the math: Peltz bought his DuPont shares in 2013, at prices close to $50. Even with yesterday’s dip, the stock is now just under $70. Some defeat. As a strategy for earning above-market returns, activism still pays handsomely – which is why it will continue.
Still, Peltz’s attack on DuPont’s Ellen Kullman – which, perhaps coincidentally, was his third straight campaign against one of the nation’s few female CEOs – was rightly viewed by shareholders as a step too far. Peltz deserves credit for his role in the rise of shareholder activism over the last three decades, before which even the least competent CEOs ruled imperiously until mandatory retirement. But Kullman was a bad target. Running a large public company is increasingly difficult in today’s rapidly changing world, and she was doing it well. Why rein her in? Moreover, DuPont is one of the few companies still putting significant resources into scientific research. That may cut cash in the short term, but it pays dividends for the company – and the economy – over time.
Kullman also proved to be a tougher opponent than Peltz bargained for. Indeed, she changed the playbook for fighting activists. She adopted some of their own tactics, going on the offensive and opening up to the press, and she assiduously wooed shareholders. (To get the full inside story, read Stephen Gandel’s excellent account here.) We suspect other CEOs will be studying her moves in months to come, and learning from them.
There will be other battles. But the activist tide has receded a bit, and that’s a good thing.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
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