More backing for Peltz vs DuPont board

Egan-Jones Ratings Corp. has followed proxy advisory fims Institutional Shareholder Servcies (ISS) and Glass Lewis & Co. in urging DuPont Co. shareholders to vote for billionaire activist Nelson Peltz to win election to the DuPont board over company-backed incumbents in a contested election May 13.

Egan-Jones has joined ISS in also endorsing former GE Capital executive John Myers, a Peltz ally. Egan-Jones has also gone further, by recommending votes for the other two Peltz-backed insurgent candidates, Arthur B. Winkleblack and Robert J. Zatta.

Writes Egan-Jones re DuPont: "While we note that as shown in the Egan-Jones Ratings Corporate Stewardship & Compensation Analysis Report the overall rating for this company is "GOOD" (http://comprtg.com) we are concerned that the dissident thesis is correct and while current macro-economic conditions and lower feedstock pricing have allowed this company to produce a decent shareholder return despite high administrative costs and other failures and that there is ample opportunity for far better returns.

"We believe Du Pont lags behind peers (one year TSR of 17.0% (compared to peer median of 23.5%) in part because of these administrative costs and the current economic environment is masking this issue to some degree.

"Based on our conversation with management, we are also concerned as to why this company needs such a large administrative staff, enough apparently to fill two new buildings.

"We are equally concerned that the company may be producing specialized content systems using numerous consultants when off the shelf systems would be faster, cheaper and more reliable.

"We also think that a push from the outside might help the company become a more cost and profit focused firm, or firms as the case may be... The company as a whole as well as the Board of Directors seems to lack focus... While we recognize there is always some risk in supporting a dissident, we believe that the opportunities for further shareholder return far outweigh these risks."

Besides the proxy service, Egan-Jones founder Sean Egan created the independent Egan-Jones credit rating agency that was targeted by the SEC after criticizing the agency's failure to hold mainstream credit agencies reponsible for the subprime lending debacle of the late 2000s.

Besides the proxy service, Egan-Jones founder Sean Egan created the independent Egan-Jones credit rating agency that was targeted by the SEC after criticizing the agency's failure to hold mainstream credit agencies reponsible for the subprime lending debacle of the late 2000s.