{ "docId": "019dd923-622b-71dc-a6db-91fb14eb885a", "docSlug": "7fff9fc593d2", "documentTitle": "E.I. du Pont de Nemours and Company (DuPont) (DD)", "authorId": "06_Trian_Partners", "authorName": "Trian Partners", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "activist_investor", "sourceTypeLabel": "Activist investor", "presentationDate": "2015-04-17 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 32, "pageCount": 45, "prevPage": 31, "nextPage": 33, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 2, "notes": "The slide uses a direct quote from an analyst and management to expose a lack of transparency.", "elementsJson": [ "headline_text", "bullet_list", "callout_box", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622b-71dc-a6db-91fb14eb885a/32", "deckHref": "/decks/019dd923-622b-71dc-a6db-91fb14eb885a", "deckJsonHref": "/decks/019dd923-622b-71dc-a6db-91fb14eb885a.json", "deckAnchorHref": "/decks/019dd923-622b-71dc-a6db-91fb14eb885a#slide-32", "components": [ { "bbox": { "h": 0.12, "w": 0.8, "x": 0.1, "y": 0.74 }, "kind": "callout", "text": "At DuPont’s 2013 Investor Day, management was not transparent about reducing margin targets, suggesting that reduced margin targets were correlated to the accounting change. Were DuPont’s independent directors aware of this? Trian’s nominees will seek to ensure that the board holds management accountable.", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0b1648d8-451a-4f7b-ab01-3b2f59147618", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "At DuPont’s 2013 Investor Day, management was not transparent about reducing margin targets, suggesting that reduced margin targets were correlated to the accounting change. Were DuPont’s independent directors aware of this? Trian’s nominees will seek to ensure that the board holds management accountable.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-14d8-75c0-8c7b-27fe74410ab7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.8, "x": 0.1, "y": 0.52 }, "kind": "list", "text": "It took prodding from a research analyst during the Q&A for DuPont to admit that certain margin targets were lowered: “...Safety and Protection margin [targets] that you show are 21% to 23% which is what they were 18 months ago. But you now exclude your pension cost...[which was] more than 500 basis points.” – JP Morgan analyst(1) DuPont responded: “...You're right, Jeff. The margin is lower between 400 and 500 basis points from that standpoint”", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0b3801be-9f60-478e-af1e-36a5efee4c0c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.8, "x": 0.1, "y": 0.28 }, "kind": "list", "text": "At its May 2013 Investor Day, DuPont gave long-term margin targets by business that differed from those given at its 2011 Investor Day", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "43689ab9-d57c-4e28-b6f9-dccc3ae8d7e9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.8, "x": 0.1, "y": 0.18 }, "kind": "list", "text": "In December 2012, DuPont introduced a new EPS reporting methodology, called “Operating EPS”, which adds back non-operating pension/other post-employment benefit (“OPEB”) costs to non-GAAP EPS", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "636a965f-d78f-4a76-a801-5615603b43d2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.8, "x": 0.1, "y": 0.35 }, "kind": "list", "text": "The Company suggested the difference between these targets was merely an accounting difference (i.e. the non-operating pension / OPEB adjustment); responding to a question about the Industrial Biosciences and Performance Materials segments, management said the following: “In terms of margins, the accounting change really accounts for the shift that you're seeing. So we have not revised up or revised down our expectations”", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9e954492-0197-4949-a2f1-7f36fce0f157", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.6, "x": 0.1, "y": 0.9 }, "kind": "other", "text": "Source: DuPont SEC filings, DuPont Investor Day transcript from May 2, 2013, Trian calculations, non-GAAP reconciliations. (1) Jeff Zekauskas, JP Morgan, DuPont 2013 Investor Day, 5/2/2013.", "attrs": null, "subkind": "source-note", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "98653b48-9e20-4a3c-b675-4854c89750a9", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“In terms of margins, the accounting change really accounts for the shift that you're seeing. So we have not revised up or revised down our expectations” — DuPont Management. “...Safety and Protection margin [targets] that you show are 21% to 23% which is what they were 18 months ago. But you now exclude your pension cost...[which was] more than 500 basis points.” — JP Morgan analyst. “...You're right, Jeff. The margin is lower between 400 and 500 basis points from that standpoint” — DuPont Management.", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-14d8-75c0-8c7b-29b3bd837541", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.8, "x": 0.1, "y": 0.1 }, "kind": "title", "text": "DuPont Changed Its EPS Reporting Methodology In Late 2012; Then Suggested Reduced Margin Targets Were Correlated To Its Accounting Change", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c6873ef5-42e5-4737-8dac-d60db010ff30", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "58274e0a-c64d-4c3d-a335-313771ecec4a", "evidence": "The slide explicitly frames management's actions as a lack of transparency and a contradiction between public statements and reality.", "confidence": 0.9 } ], "arcBeats": [ { "to": 35, "from": 25, "beatId": "9e954d0e-7996-479e-abc4-f7d4addd919c", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Solution", "beatSlug": "problem-agitate-solution-solution-provide-relief", "evidence": "The document offers a solution through Trian Partners' nominees and plans, highlighting their potential to unlock value and address the company's governance issues.", "position": 2, "confidence": 0.8, "parentBeatName": "Resolution", "parentBeatSlug": "resolution" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }