Peltz catches some mud

Duck behind this rock, put this sauce pot over your head, and watch the bullets fly. Neither combatant is a restaurant chain, but what happens in this firefight could influence what happens to any number of big-name foodservice companies—or possibly their suppliers—in the months ahead.

On one side of No Man’s Land is H.J. Heinz Co., the ketchup king. And dug in across the barbed wire is Nelson Peltz, corporate raider extraordinaire. He’s once again boasting that he can deliver far more growth in a company’s stock by directing its management, as he did with Wendy’s. In the instance of Heinz, he’s demanding the right to fill more board seats than Yankees typically do in their bleacher section. Peltz wants five chairs in all, out of a total of 12.

He’ll likely prevail, but not without catching a few hurled bricks in the process. Heinz’s management, not surprisingly, has rebuffed Peltz’s demands. Last week it sent a letter to shareholders, imploring them to cast their proxy votes against the corporate raider’s candidates. Why, it argued, should shareholders elect directors who wouldn’t meet the company’s governance standards?

As the letter noted, the candidates include not only Peltz himself, but also his son-in-law, Edward Gardiner; his friend, the former pro golfer Greg Norman; his longtime business partner, Peter May; and a former employee, Michael Weinstein. Although Heinz stops short of saying the set-up would reek of cronyism, it asserts that votes would be cast in a block for the what’s in the best interest of Peltz and his partners, not necessarily the company’s body of shareholders.

The letter also asks why 42 percent of the board’s seats should be controlled by someone who holds 5.5 percent of Heinz’s stock.

Tucked here and there are a few subtler putdowns of Peltz and his colleagues, like the observation that their Trian Group is an off-shore operation, technically headquartered in the Cayman Islands. It also asserts that Peltz and May were censured by the London Stock Exchange in 1991 in connection with an overseas investment, and made payments to settle claims of securities fraud.

Peltz hasn’t sat idly in his foxhole while the mortar shells fell. His Trian Group investment group has countered with a letter to shareholders, urging them to opt for more riches than they’ll get under Heinz’s current management. As the communication notes, someone who bought $100 worth of Heinz stock in 1998, when current CEO William R. Johnson ascended to that post, would had a stake worth $62 as of February of this year.

It also asserts that the Trian-nominated board candidates are “independent” and “highly qualified.”

The matter will be settled by a vote of shareholders that concludes at Heinz’s annual meeting on Aug. 16.