Heinz board nixes shareholder growth plan

26/05/06 Investment firms Trian Fund Management LP and Sandell Asset Management Group this week proposed a growth strategy to pressure Heinz into boosting returns. The firms, which own about 5.4 percent of Heinz stock, called on the company to slash annual costs by $575 million and reduce deals, allowances and other incentives to retailers by at least $300 million.

That plan would cripple Heinz because it called for cuts in selling, pensions, salaries and benefits, marketing, and research and development, the company said in a statement.

The Heinz board "sent a clear and resounding message today to Mr. Peltz," said company spokesman Michael Mullen. "It unanimously rejected his demands for representation on the Heinz board based on his poor corporate governance record."

Heinz will unveil its strategy for growth to shareholders on June 1, when it releases its next quarterly earnings, he said.

The company said it generated a record $4.4 billion in cash flow from operations in three fiscal years, enabling it to return more than $4.2 billion to shareholders through special and annual dividends and share repurchases.

Trian and Sandell have nominated five people to Heinz's 12-member board, which will be elected when shareholders meet Aug. 16.

They are: Peltz, 63; Peter W. May and Edward P. Garden, three principals of Trian Fund Management; Michael Weinstein, chairman of Inov8 Beverage Co.; and golfer Greg Norman, chairman and CEO of Great White Shark Enterprises Inc.

The Heinz board determined those candidates did not meet the qualifications set forth in the company's governing principles, Heinz said. Each Trian nominee is a personal friend, employee or relative of Peltz, and there is concern they would put Peltz's and Trian's interests ahead of Heinz shareholders.

Peltz, chief executive of Triarc Cos. Inc., is known for leading several high-profile corporate buyouts.

Triarc spokeswoman Anne Tarbell did not return a call for comment late Wednesday.

Heinz is known for its namesake ketchup and has embarked on a restructuring plan focused on ramping up growth in three food categories: ketchup and sauces, meals and snacks, and infant nutrition.

The company has been selling underperforming European businesses as part of its strategy. Its brands also include Ore-Ida frozen potatoes and Smart Ones meals.