On April 1, Yale Prof. Jeffrey Sonnenfeld wrote in the Wall Street Journal that “for all the talk about activist shareholders—usually large hedge funds—getting seats on company boards and pushing to make strategic, value-enhancing changes, these activists haven’t fared especially well.”
In fact, Sonnenfeld charged: “Investing in index funds would have yielded better returns over the past few years than most activist funds.”
Sonnefeld then picked on Nelson Peltz’s Trian Fund Management and its “activist assaults on the Bank of New York, PepsiCo and DuPont are an interesting case in point.”
Turns out, argues Sonnenfeld, that Trian delivered “only an 8.8% return in 2014, nearly five percentage points below the S&P 500.”
And back in 2012, Trian was “up a scant 0.9% while the S&P 500 was up 15.9%. Clearly, this undermines Mr. Peltz’s argument that DuPont’s board needs Trian and Mr. Peltz to drive better returns.”
Then Sonnefeld delivered the deep cut:
“Mr. Peltz now is waging a costly, distracting proxy battle to break up DuPont to deliver short-term gains while demanding he personally have a seat on the company’s board. This despite Trian’s poor showing versus DuPont and the latter’s recent hiring of two new directors, Edward Breen and James Gallogly, two former CEOs and tough industrialists whom Mr. Peltz unsuccessfully solicited in 2014 to serve on Trian’s board of directors.”
Peltz obviously fired back, accusing Sonnenfeld of misleading his readers regarding Trian’s goals and long term performance. Then, according to Sonnenfeld, Peltz started telling reporters that the professor is defending DuPont and its CEO Ellen Kullman stems from his secret business relationship with the company.
So Sonnenfeld emailed Peltz the following:
“I would be most appreciative if you did not encourage any media to suggest you challenge my own character or integrity. I have no conflicts coloring my views on this matter. To be clear, I am not and have not been a paid advisor/consultant to Ellen Kullman of DuPont or to anyone that she employs and do not consult for DuPont. Neither Ellen Kullman nor DuPont fund any of my professional activities at Yale.
“I am not aware of whatever engagements DuPont may have somewhere at Yale but if any exist, I am sure they are smaller than your own engagements with Yale. Now that you know this, I am sure you will agree that it would be unfair and false to state or imply anything different than this.”
So Peltz called up Rupert Murdoch (we think) and asked for help (allegedly) which is why the NY Post yesterday ran off a list of all the cases in which “Being friends with Yale School of Management professor Jeffrey Sonnenfeld certainly has its advantages.”
They charged that “three times in the past 16 months, Sonnenfeld has written opinion pieces or been quoted in the media supporting a company or CEO who was honored by his Chief Executive Leadership Institute or was a financial backer of his biannual CEO Summit.”
Then, to build up their case, the Post folks turned on the innuendo machine, and started to connect business leaders Sonnenfeld that praised in articles or in quotes given to news outlets, with the fact that those same CEOs sponsored his CEO Summit. That’s patently unfair, because the Post cherry picks these cases, avoiding a more serious discussion of the professor’s relationship with his conference sponsors, how many of them did he not praise? How many did he actually criticize?
So, it’s war, and an unjust one at that, since it sides with some of the more destructive forcves in modern American capitalism — to cite Black Rock’s Laurence Fink.
But our job is to report wars when they erupt, so here’s more Sonnenfeld bashing. In addition to the Peltz bashing and Kullman praising WSJ article, the Post listed the following:
May 2014, Sonnenfeld tells the Financial Times that IBM CEO Virginia Rometty is “the perfect person” to lead the company. IBM has been a leadership partner of Sonnenfeld’s CEO Summit.
February 2014, Sonnenfeld pens NY Times op-ed praising Patriarch Partners CEO Lynn Tilton — Patriarch sponsored Sonnenfeld’s 2014 CEO Summit. The same piece also defended PepsiCo CEO Indra Nooyi, also one of his CEO Summit sponsors.
Finally, Ford’s Lincoln Motor Co. sponsored Sonnenfeld’s 2013 CEO Summit, and half a year later, Sonnenfeld told Bloomberg that Ford’s CEO transition was a “classic textbook, done-right CEO succession.”
Like I said, sooo unfair, and yet, I can’t take my eyes off this car wreck…