DuPont chief: Hotel and country club not a burden

• The Wilmington-based company is in no hurry to shed its grand downtown hotel and sprawling suburban country club
• For more than a year%2C Kullman%2C 58%2C who has headed the 212-year-old science company since 2009%2C has been under pressure from investor Nelson Peltz and his Trian Fund Management L.P. to improve the company%27s financial performance
• Kullman defended the company%27s management of its various businesses%2C saying it has done a %22deep portfolio analysis.%22

The DuPont Co.'s chief executive indicated Thursday that the Wilmington-based company is in no hurry to shed its grand downtown hotel and sprawling suburban country club, despite criticism from an activist shareholder that the company's hospitality segment is a drain on financial performance.

"Look, hospitality is a business unit that breaks even, plus or minus. It's not a burden to the company," said Ellen Kullman at a discussion at the Council on Foreign Relations in New York City. "It's not relevant to the return of the shareholders."

For more than a year, Kullman, 58, who has headed the 212-year-old science company since 2009, has been under pressure from investor Nelson Peltz and his Trian Fund Management L.P. to improve the company's financial performance. Trian is one of DuPont's largest shareholders. It's believed Peltz could make a bid for a few DuPont board seats next year.

In September, Trian took a public shot at DuPont's management team in a letter to the board of directors.

In it, Trian included the maintenance of the Hotel du Pont on Rodney Square, the 1,251-seat, Victorian-era DuPont Theatre in the hotel and the DuPont Country Club off Rockland Road as some of the reasons DuPont's conglomerate structure "is destroying shareholder value."

Trian listed the three as partly responsible for an estimated $2 billion to $4 billion in excess corporate costs. Peltz has been pushing to break up DuPont by splitting it into two separate companies.

Under the heading "Examples of Corporate Largesse" in an accompanying white paper, Trian lists the country club, hotel and theater.

"We question the strategic fit of DuPont's hospitality and services division," the paper says.

Kullman, who carefully managed her message in the hourlong discussion with Alan Murray, editor of Fortune Magazine, said the company is "constantly looking at options."

"But we're in Wilmington, Delaware, and it's not necessarily one of those cities that large hotel chains are flocking to," Kullman said.

In November, a DuPont Co. statement said "We have been and remain open to divesting these properties if appropriate value can be received for shareholders."

Kullman defended the company's management of its various businesses, saying it has done a "deep portfolio analysis."

"We've been a very active portfolio manager. Just in the last six years we've sold off the coatings business. We're spinning off our chemicals business. We've had six different small dispositions this year, small product lines that had kind of peaked out on where innovation and science could drive growth," she said.

Kullman also skillfully evaded what appeared to be a gender question by Murray related to female corporate heads. Murray said before Peltz "went after" Kullman, he "went after" Indra K. Nooyi, chairman of PepsiCo., and before that he "went after" Irene Rosenfeld when she headed Kraft Foods.

"What do the three of you have in common?" Murray asked Kullman.

"Well they're not all engineers…" Kullman said.

When Kullman took the helm of the science company, the nation was still in the Great Recession.

"The interesting part about starting my job when I did in the beginning of '09 [was] we saw very clearly how each product line reacted to a difficult economic situation. We saw where they were strong, where they were weak ... their competitiveness," Kullman said.

Based on that information, DuPont took action to improve the businesses.

"We actively managed the portfolio and we see the connectiveness and growth capability of what is there," she said.

Kullman said she understands that many shareholders, like Peltz, "have strong views."

"And I learn from that. I'm always open to listening to it. Because the interesting thing is, when you sit inside a company and live and breathe it every day, the question is: what aren't you seeing? My job is to make sure that we're seeing things," she said.

By talking with customers, government officials and shareholders, Kullman says she is better able to understand their world and "how it can impact mine."

"That informs our leadership, our board, in how we can create more value and it challenges us to think in different ways," she said.

Trian said in the September letter that it has discussed with DuPont the possibility of adding a Trian representative and an industry insider to the board.

"...That idea has been summarily rejected," Trian said. "Ultimately, the shareholders will decide the right path forward for DuPont."

Contact Maureen Milford at (302) 324-2881 or mmilford@delawareonline.com.