Breakup pressure: DuPont vs Peltz: 'Appease' or co-opt?

On the eve of what is expected to be a contested election for four seats on its corporate board, DuPont Co. says it has appointed Tyco International chairman and ex-CEO Edward D. Breen and former LyondellBasell Chemical chief James L. Gallogly to that board, replacing two directors who will move to DuPont's titanium-dioxide spinoff company, Chemours.

Billionaire investor Nelson Peltz and his Trian investment group have bought a stake in DuPont, named Peltz and three allies to run for board seats against DuPont incumbents, and are pushing to break up DuPont so more money can be paid soon to them and other shareholders. In a separate statement, DuPont Chairman Ellen Kullman said her board had been willing to add one Trian director, but not Peltz. 

The revelation that DuPont was willing to take in a Peltz-backed director shows Kullman is still trying to "appease" Peltz and is likely to make more concessions, writes Carol Levenson, analyst at Gimme Credit LLC, in a report to bond investors. She previously noted DuPont now plans to give the $4 billion it hopes to raise by spinning off Chemours to shareholders, instead of paying down debt -- another sign DuPont is giving in, Levenson added.

Breen has experience in break-ups: After he was unable to convince investors to boost Tyco's share price to the levels he thought it was worth in the mid-2000s, Breen broke Tyco into several companies, including the current TE Connectivity and Covidien, among others, earning what DuPont says was a "703 percent total return" for Tyco shareholders. Joining the DuPont board is a sort of return journey for Breen: A former executive at Motorola and Horsham-based General Instruments, Breen was recruited to run Tyco by Tyco's former lead director, Jack Krol, an ex-DuPont Co. CEO.

In a statement, Breen praised DuPont in language that echoed DuPont chairman Ellen Kullman's self-defense against Peltz's criticism. Breen called DuPont "a company with strong corporate governance practices and a world-class Board comprised of proven leaders across global industries. I am excited about joining this Board, which has demonstrated active oversight of a strategy that is delivering results and positioning the company for future success. I look forward to bringing my experience to DuPont and am confident in the company's prospects for continued success and value creation." Breen is also a Comcast Corp. director.

Gallogly guided LyondellBasell out of bankruptcy and back to life as a profitable publicly-traded company. In a statement, he said he looks forward to supporting management's  existing "comprehensive realignment" plan, which includes expense cuts.

Breen and Gallogly will replace DuPont directors Curtis J. Crawford and Richard H. Brown. Brown, ex-ceo at Onix Microsystems, heads leadership-consulting firm XCEO Inc. Brown is a former chairman and ceo at Electronic Data Systems Corp. (EDS).