The board of directors of HJ Heinz Company has unanimously rejected the demand by a group of dissident shareholders for representation on the Heinz board.

The group, led by activist investor Nelson Peltz and his Cayman Islands-based hedge fund, have been highly critical of efforts by the Heinz executive team and CEO William Johnson to implement a turnaround at the famous food group.

In April, the shareholder group called for five places on the Heinz board. Yesterday (24 May) the pressure was increased when Peltz submitted a proposal he believes will enhance shareholder value at Heinz.

The paper called “Results Speak Louder Than Words: A Plan to Enhance Value at Heinz”, detailed the action that the group wants to see Heinz management taking.

Peltz’s suggestions include cutting costs, selling assets and increasing its marketing on core brands like ketchup. Peltz is also pressing the company to increase share buybacks and make higher long-term dividends.

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However, the Heinz board said it had rejected both the board nominations and the plan released by Peltz.

“In making its determination, the board noted that the Peltz/Trian nominees do not meet the qualifications and standards for directorship or independence as set forth in the company’s Corporate Governance Principles,” a statement said.

Heinz said that each of the Peltz/Trian nominees is a close personal friend, employee or relative of Peltz.

“Accordingly, there is a substantial concern that if elected to the company’s board, they would put the interests of Mr Peltz and Trian ahead of the interests of the company’s shareholders as a whole. In addition, the board noted that the Peltz/Trian nominees would represent over 40% of the Heinz board, even though the stock ownership of Heinz held by the Peltz/Trian group is only slightly over 5%.”

The board also reviewed the plan released by the Peltz/Trian group, and concluded that the plan sets unrealistic targets and would be detrimental to Heinz and its shareholders.

The statement said: “Among other things, the board noted that the Peltz/Trian plan calls for the reduction of the company’s SG&A (selling, general & administrative costs that typically include pensions, salaries/benefits, marketing and research & development) and other expenses by $575 million – an unrealistic figure that, if implemented, would cripple the Company. The Company’s SG&A is, and always has been, below the average for peer companies in the industry.”

The board added that after reviewing the Peltz/Trian plan, it reiterated its strong support for Heinz’s current management team and the progress it is making towards implementing the company’s current strategic plan.