Heinz is stressing that the battle over its future between the board and Nelson Peltz’s Trian Group is not about personalities. But the relationship between CEO William R Johnson and major Wall St investors is going to be crucial as the board seeks backing for its plans. David Robertson reports.

Both sides battling to determine the future of ketchup-maker HJ Heinz have now laid out their strategies and an intense lobbying campaign is underway to persuade institutional shareholders to back one or other plan.

Heinz announced last week that it would cut costs by US$355m over two years and introduce more than 100 new products. It has also pledged to increase its dividend and buy back $1bn in shares, a clear attempt to buy favour with the shareholders who will determine the current management’s future.

Chief executive and chairman William R Johnson argued that his “superior growth and value plan” would put the company back on track and no further changes were needed. In other words, investors should reject the proposals put forward by activists led by Nelson Peltz’s Trian Group. These agitators claim that Heinz has been promising change for years and achieved little.

As just-food revealed last month, Trian wants Heinz to become more focused by divesting one of its divisions; it also wants improved return on equity through greater cost-cutting and revenue growth fuelled by innovation.

With both plans now presented, there will be some furious behind-the-scenes negotiating with major shareholders to build support for one or other plan.

For Heinz, perhaps the biggest challenge will be convincing Wall Street that Johnson and his board have what it takes to energise the company. As Trian has pointed out, this is the sixth major restructuring or strategic plan announced by the current management since they took over in 1997. Why believe Johnson now when so many opportunities to turn the company around have come and gone?

Peltz, by comparison, has already burnished his reputation with successful interventions at both the Arby’s and Wendy’s fastfood groups. Much, therefore, rides on Johnson’s charm offensive with Wall Street and he will be taking the lead in the coming weeks as Heinz lobbies its shareholders.

Heinz director of global corporate affairs Michael Mullen said: “Chief executive officer Bill Johnson will be leading this effort but we don’t see this as a personality issue. It is about the credibility of the Heinz board and that is what we will be discussing with our stakeholders. Our focus is 100% on discussing our plan and we will be explaining it to our constituents, and explaining why it is right for the company.”

According to analysts, momentum is currently with the incumbents at Heinz but much depends on how Johnson and his team address shareholder concerns. Some analysts feel that if Johnson comes across as too anti-Peltz or too unwilling to adopt alternative ideas it might further a perception, partly created by Trian, that Johnson is the wrong man to see through radical change.

This may well mean that Johnson has to become more conciliatory towards ideas such as selling the Italian baby-food division Plasmon or splitting his job and hiring a new CEO or chairman.

At the moment, both ideas are completely off the table. Mullen said: “Heinz is committed to the Plasmon business and Bill Johnson has the full support of the board as both CEO and chairman.”

However, the Heinz management might wish to consider that in a publicly fought battle like this, chief executive ego is often as much of a deciding issue as proposals to cut jobs or close factories.