Ellen Kullman’s big win needs applause


After a long, bruising battle with hedge fund Trian Partners and Nelson Peltz, Dupont’s management headed by CEO Ellen Kullman soundly defeated an attempt by the investment fund to gain seats on the DuPont board with the stated purpose of breaking up this storied company for a presumed financial gain to investors. Activist investors have recently been successful in gaining board seats to change companies’ strategies (Example: Dow). While it is true that in some cases investors have had a beneficial effect on companies’ strategies, the “raid” on DuPont had to be strongly countered to preserve the currently structured firm as it continues to innovate and lead its industry. One of my recent posts describes how another iconic firm, ICI, eventually disappeared after breaking into pieces and abandoning its traditional long range strategy, combining businesses that throw off cash with novel and specialty businesses that need cash to carry out research. Trian’s contention that DuPont’s research was not providing adequate return was soundly rejected by a number of the large funds holding DuPont stock. Their view evidently was that DuPont’s historical success in bringing new products to market gave them more confidence in DuPont’s management than in Trian Partners. And DuPont’s shareholders are happy with DuPont’s financial performance: 214% total shareholder return (12.31.08-12.31.13) versus 184% S&P chemicals and 128% S&P 500.

DuPont is a $ 36 billion company with strong positions and focus in Agriculture and Nutrition, Industrial Biosciences and Advanced Materials. As arguably the leading chemical science company, its “innovation engine generated sales of more that $ 10 billion from new products commercialized between 2010 and 2013!”  Much of DuPont’s efforts is oriented toward global population growth, renewable energy, protecting the environment and creating novel advanced materials for an increasingly urban world.

We should also consider the fact that leading European, Japanese and Chinese chemical firms are not at risk from activist investors and, like DuPont are investing heavily in research, with long range objectives. It would be tragic to lose the leadership of DuPont: continuing to innovate in its chosen areas.

As some of you know I have been very active at the Chemical Heritage Foundation in Philadelphia. Our Joseph Priestly Society seminars and luncheons frequently feature leading executives from the chemical industry. We were pleased to invite Ellen Kullman as a keynote speaker a couple of years ago and applaud her for her success in managing iconic DuPont and winning the battle with Trian Partners.

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