When activist investor Nelson Peltz and his investment firm Trian Management first revealed a $3 billion or so investment in Procter & Gamble Co. (NYSE: PG) last February, nearly everyone expected the investment to lead to a battle for the hearts and minds of P&G investors. On Wednesday, Peltz published a white paper laying out changes he wants to make to the consumer product giant, and on Thursday morning P&G responded.

In July, Peltz and Trian launched a proxy battle seeking a seat on P&G’s board and changes that the firm wants to make in order to overcome what it claims are P&G’s weak results over the past decade.

During that time, P&G’s share price has risen by about 42% as of Wednesday’s close, while the S&P 500 Index has climbed about 67%. Competitors like Unilever and Colgate-Palmolive have seen share prices rise by 98% and 112%, respectively.

In the white paper, Peltz and Trian say the biggest challenge facing P&G is market share loss, both compared to traditional peers and to smaller competitors in the consumer products sector. Peltz offers eight strategic initiatives to get P&G back on course:

• Organize P&G in such a way to promote accountability, reducing 10 current business units to three.
• Ensure that management’s $12 billion to $13 billion productivity plan delivers results.
• Fix the innovation machine.
• Develop small, midsize and local brands.
• Make mergers and acquisitions a growth strategy and core competency.
• Win in digital.
• Address P&G’s insular culture.
• Improve corporate governance.

In its response, P&G points to the progress the company has made, calling Peltz’s view of P&G “very outdated and misinformed,” and stating the white paper brings up “nothing substantive” and ignores the progress the company has made recently.

The company also responds to each of the eight points Peltz outlined, noting especially Peltz’s request to be added to the board of directors:

Contrary to Mr. Peltz’s claims, the full Board carefully considered and discussed his request to be added to the Board. The Board evaluated Mr. Peltz against its previously identified list of desired skills and experiences (e.g., digital, health care, global) and concluded that he did not fill a current need. … The Board and management also talked to many directors, CEOs and others who have worked with Mr. Peltz, and positive recommendations were not forthcoming. Several people, however, would only speak candidly about their experiences with Mr. Peltz if those discussions were kept confidential, for fear of retribution. The Board ultimately concluded that adding Mr. Peltz would be a significant departure from its governance best practices.

P&G’s annual meeting is scheduled for October 10. Shares traded down more than 0.2% Thursday morning at $92.95, in a 52-week range of $81.18 to $92.96.

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