E.I. du Pont de Nemours and Company (DuPont) DD
DuPont is a chronically underperforming conglomerate bloated with $2-4bn of excess costs; putting Trian on the board unlocks a $120+/share, 21% IRR path by 2017.
Thesis
Trian argues DuPont has been a bottom-quartile earner versus every relevant peer set for more than two decades, with EPS below 2011 levels and organic growth and margins trailing peers in five of seven segments. The root cause is conglomerate complexity layered with $2-4bn of excess corporate overhead, dilutive M&A (Danisco), uneconomic ROIC in two-thirds of the revenue base, and a board that rewards management for missed targets while CEO Ellen Kullman sells 54% of her own stock. Trian's White Paper math implies a target of over $120 per share by year-end 2017 — a 21% IRR — assuming peer-level growth and margins, 2x leverage, a 9.9x NTM EV/EBITDA multiple and full return of excess free cash flow. The ask: vote the GOLD proxy card to elect Peltz, Myers, Winkleblack and Zatta, who will push to assess corporate structure, strip out excess costs, fix capital allocation, and restore accountability.
SCQA
DuPont is a 200-year-old diversified chemicals and agriculture conglomerate operating seven segments, yet since 1998 it has continually restructured the portfolio while total shareholder return has trailed the S&P 500 and S&P Chemicals by 89 and 202 points.
EPS is bottom-quartile versus every peer group, organic growth and margins trail peers in five of seven segments, and ~$2-4bn of excess corporate costs, uneconomic R&D and 'crony' compensation are masked by conglomerate complexity and opaque, ever-shifting disclosure.
Elect Trian's four independent nominees via the GOLD proxy card so the board can assess whether the portfolio should be separated, strip out excess costs, overhaul capital allocation, fix Chemours' governance and align pay with performance.
Trian's White Paper implies a target value exceeding $120 per share by year-end 2017 — a 21% IRR — with additional upside from $2-4bn of excess cost elimination beyond the base case.
The three reasons
- 1
DuPont's EPS growth is bottom-quartile vs. every peer set over 3, 7, 10 and 20-year horizons
- 2
Conglomerate complexity and ~$2-4bn of excess corporate costs mask a weak core business
- 3
Trian's White Paper target of $120+/share by 2017 implies a 21% IRR with Trian on the board
Primary demands
- Elect Trian's four nominees (Nelson Peltz, John Myers, Arthur Winkleblack, Robert Zatta) to the DuPont board
- Assess whether the existing conglomerate portfolio should be separated
- Eliminate $2-4bn of excess corporate costs and ensure productivity savings flow to the bottom line
- Overhaul capital allocation: rationalize R&D/capex, grow the dividend, return excess FCF to shareholders
- Fix corporate governance at Chemours spin-off and end 'crony' compensation that pays for missed targets
- Vote the GOLD proxy card at the 2015 Annual Meeting
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Precedents cited
- Heinz (Trian on board 2006-2013 through 3G/Berkshire acquisition)
- Ingersoll-Rand / Allegion spin-off
- Mondelez / Kraft Foods split
- Wendy's / Tim Hortons
- Cadbury / Dr Pepper Snapple
- Family Dollar
- Snapple turnaround (HBS case study)
- Kraft governance from Mondelez spin
- Time Inc. spin governance
- PayPal / eBay spin governance
Notable slides (7)
Notes
Classic Trian proxy-fight deck for the landmark 2015 DuPont contest — one of the largest proxy fights ever by market cap and narrowly lost on the day (though Kullman resigned within months and DuPont later merged with Dow). Title is 'Trian's Discussion Points.' Every page bears the 'VOTE THE GOLD PROXY CARD' call-to-action. Rather than presenting a hard breakup thesis, Trian strategically frames itself as 'open-minded' about separation — the ask is board seats, not a specific spin. Explicit $120+ target and 21% IRR are referenced from Trian's September 2014 White Paper (at DuPontCanBeGreat.com). CEO-quote contradictions used extensively (2003 INVISTA press release; 2013 Investor Day margin targets). Stake of 2.7% inferred from the Trian track record table on p.41 which lists 'DuPont — 2.7% highest % of company owned by Trian'. Nelson Peltz identified as author/cover signatory on p.7 as lead nominee and CEO of Trian. The 'Saga of DuPont's 2011 EPS' slide (p.35) with nine different EPS figures and the CEO insider-selling slide (p.10) are the deck's most quotable rhetorical set-pieces.