Squawk alley. We are live from post 9 at the New York Stock Exchange. John fortt joining us from out west in san francisco. Sara eisen, though, the big story outside p g headquarters in cincinnati. Carl quintanilla has the morning off. We have a lot to get to this morning, but we are going to start with that breaking news from cincinnati and the big proxy fight over the future of proctor and gamble lets get to sara. Sara weve got a discrepancy here in the vote, michelle. P g says that it has won and that nelson peltz was not voted to the board of proctor and gamble, but we just talked to nelson peltz of trian, and he says it is way too close to call and they are going to continue to go through and count every vote, make sure some votes were not done twice, and go through it, because we are told that this is a matter of 10 million votes, and the company with billions of votes outstanding. 2. 7 billion shareholder votes to count. So that is where we stand right now. The Shareholder Meeting has wrapped up nelson peltz in talking to us say even if they did win, the fact that it was so close is a no confidence vote on management and on the current strategy. Heres what else he just told us moments ago. Our numbers say it is as close to a dead heat as possible i think our numbers show we are in the lead this morning we dont know what they came in. They dont know what we brought in, but if anything, its plus or minus 1 . We need to really count it and understand it. And he says even if they did win, they should invite him to be a board member because it was so close and because a lot of his points resinated that they need to shake up the culture of this company. Hes called it an insular culture that they need to focus on smaller brands, they need to be focused more on Digital Management has argued they have a Transformation Plan in place, give them time, they just started. David taylor has been the ceo for two years and the stock has outperformed in that time. Hes just giving a little press conference after theyve announced the vote, then hes going to come straight here to the chair and speak to us exclusively outside of p g headquarters guys sara, do you think mr. Taylor is going to be under extra pressure when he sees the stock is down in the wake of his declared victory, even though we know its in dispute by trian . I think that he will certainly play it down, the stock price, and certainly some of the wall street Institutional Investors were on the peltz side i think hell also say were going to continue our engagement with peltz and they have had a relationship in speaking to each other ahead of this proxy battle and listening to ideas that nelson has had ever since he disclosed his stake earlier this year he still has 3. 5 billion worth of shares, about 1. 5 of the vote, but you can bet theyll ask about that stock price reaction, what it tells him, what it tells peltz, which we asked, is that shareholders should be disappointed with this company and he presents it as a company thats sort of stuck in the dark ages and they need an outsider to come in and change and he thinks he has a shot to do it, whether its in the vote counting or continuing to press on with getting a board seat on this company sara, at the same time, the stock price is still up about 8. 6 year to date. Thats in line or better than many other staples companies, and you spoke there with mr. Peltz about some of the tail winds ahead of the next quarters results, which gives the Company Management quite a lot of leeway now to protect themselves absolutely. One of those key tail winds, and the company has argued this is largely responsible for some of its struggles over the last few years, is that stronger dollar, which turned in 2017 into a much weaker dollar. Proctor and gamble does a lot of business abroad, so all of that business is worth less when the dollars strong, its worth more when the dollar is weak, and that should be coming as soon as this quarter but i think investors are going to write that off and parse some of the more underlying trends in the business are they able to Grow Market Share again, thats something that peltz has criticized the company for. Are they able to turn around key brands that have continued to struggle like gillette, which responded with lower razor prices, but it losing shares to brands like harrys and Dollar Shave Club we were following how the breakdown would go, looks like peltz won black rock and state street p g won vanguard and its employees. Remember, this is a much larger than your typical retail shareholder base, 40 , and 25 of that is p g alum because of the stock compensation plan, so that was a win for p g, but again, they are all still ferociously counting, even though p g has declared it a winner sara, quickly, if nelson peltz did win this vote if everything is locked and counted, hes slightly framed in the interview as still a victory for the activist investors, but if he lost the vote, surely thats an odd answer well, because it was so close, and if you think about it, almost 50 of the vote is a very strong statement that shareholders made, including two key index funds here, which were big question marks going into this and i think his point there was, he put up a very good fight no matter what. Hes not convinced its over yet, and that sends a powerful statement in itself that the Biggest Company ever to face a proxy vote with a very powerful board made up of current and former ceos that put what he says is 100 million, the company says more like 30 million into this proxy battle and they can barely win this he says is definitely a message loud and clear for other Big Companies that nobodys safe sara, great stuff thanks very much well be back with you for more in a few moments time. Kind of like election night, one side claiming victory, the other failing to concede, markets moving isner 2004, he won 43 of the shareholders withheld their vote for him. The board said thats a loss and took away the chairmanship from him. Remember how shareholder votes in america go, they are sleepy nobody does them, you know exactly. Much more to this to come throughout the show. Meantime, lets get an update on walmart. Shares up big this morning as the Worlds Largest retailer moves through its annual analyst day presentation Courtney Reagan has been monitoring the event and joins us with the latest one dow component to another, walmart shares are soaring, halfway through the analyst day, shares up more than 4 right now. Its the best single day percentage move in about 17 months, trading at levels not seen in two and a half years, so why are shares higher . In part from earnings and sales guidance, but also from a new 20 billion twoyear share buyback. Walmart reiterating the current fiscal year, racketing analyst expectations for fiscal 2019, forecast earnings will grow about 5 , so the high end matches analysts expectations also expecting sales to grow 3 for 2019 both comp sales and ecommerce sales seen growing remember how big walmart is, so thats good for analysts to hear mark lauries presentation, though, thats what most analysts were anticipating that wrapped up, and we know ecommerce is where the big growth is, so ecommerce is forecast to grow 40 in fiscal 2019 with the expenses associated with that, expected to start to decrease after this year think of that as the startup within a bigger traditional retailer, so the expenses are higher lore hired 250 category specialists so far for the digital team, so what they are doing is focusing on the top 1 million products to make sure they come up ranked in the right way, the display is right, the descriptions are optimized lore says walmart has given him and his team the independence to move, test ideas like store associates delivering packages, experimenting with a. R. , v. R. , and drones and more. The number of stores that will have walmarts grocery order online and instore pickup is expected to nearly double to more than 2,000. A key focus for walmart, remember, its the countrys largest grocer, especially as the space gets more competitive with amazon buying whole foods and u. S. Expansion from liedel and aldi michelle got it, thank you so much, courtney lets talk more about walmart and the ecommerce sector, especially when we see the move happening today. Lets bring in victor anthony. Karen short, retail analyst at barclays joins us. Karen, good to have you here the stock at one time up 5 , now up 4. 5 . They do have sales growth, which is pretty outstanding considering the retail environment in the last year, but what else, why is this stock moving so sharply today . Thanks, michelle, yeah, i think part of it is i do think going into today there was a view from some investors that the environment had gotten materially worse and that there was some expectation at least from people who were short that there would be another reset, and we just could not have disagreed more with that stance. You know, if anything, its the environment has gotten worse because walmart is being aggressive and making it worse, but i think it was a bit of a setup in terms of why the stock is acting well, but the guidance, as courtney outlined, is very robust how crucial is mark lore, jet. Com, and the ability to reinvigorate the ecommerce platform to the story . Mark is a very big part of the story, but its working with greg thorn, as well, leveraging four walls, as well as the ecommerce, and what they are doing and as doug said, they are acting very rapidly and decisively, and if you think about what they are doing, they are testing anything and everything in the new world of retail, and no one in retail that we cover comes even close to doing that besides amazon, and thats why walmarts winning. Does this kind of guidance, this kind of reiterance and commitment make you worry for amazon i think amazon is in such a strong position, doesnt make we worry, but ecommerce is wide, theres multiple competitors i spent time prior to the acquisition of by walmart and i was somewhat lukewarm about his ability to compete against amazon, but did think he was a visionary. That was one of my main takeaways after spending time with him and the company i think hes a huge asset. I think what hes doing, his vision for the company, you know, extent in terms of shipment promotions, artificial intelligence, a. I. , should make that a big focus i think that gives walmart, i think, a nice Competitive Edge against amazon, but im not too worried about amazon i think all the different initiatives that they have under way in terms of convenience, selection, prime, gives them a really strong competitive advantage over the next ten, 15 years. Will groceries prove to be a mistake for amazon to enter into, and with walmarts expansion for online expansion, as well, well ahead in that area i think walmart is well ahead, but groceries are such a small percentage online, so its a category thats right for disruption in the space, and who better to do that than amazon . So i think it was the right move for them i think they ultimately will be successful, so im not too worried about their ability to really compete there i think, you know, hes had the midas touch. Hes had failures, but for multiple categories hes shown he could grow businesses and develop categories over time and i think hell be successful there, as well karen, is walmart doing enough to stave off amazon here, the stock price that we see the move today, mark lore and what weve seen the stock do year to date is that enough absolutely it is. Also keep in mind they have ten times the number of stores, bricks and mortar, that whole foods or amazon with whole foods now has. As doug outlined in his prepared remarks, they get two times the customers who shop in the store and then become ecommerce customers and these same customers spend more in the store after they become ecommerce so its not that youre losing sales to ecommerce at the expense of bricks and mortar all right, guys, lady, excuse me, thank you. Take care, good to have you on thanks. Switching focus. At least ten dead as wildfires spread across northern californias wine country, forcing thousands to evacuate, while destroying hundreds of homes and businesses our aditi roy is in santa rosa now with the latest. Aditi . Reporter hi there, wolf. Thats right, this neighborhood has been incredibly affected by these wildfires. Its basically been decimated to the ground take a look behind me. This is a car, its barely recognizable out this way were stepping in what was the driveway of a home. This was the garage and take a look back here thats just an empty shell that remains of the front of this home it is a community thats been devastated by these wildfires, fires that have killed ten people and left 20,000 people fleeing for their lives. They have affected nine counties in california, most of them in northern california. And 1,500 homes and businesses have been destroyed. They include those everimportant wineries and hotels in the area that comprise the critical Tourism Sector here its an industry that brings in about 50 billion in Economic Impact in the u. S. Every year. Some of the big names that have been affected in this area that we know of so far are the Mountain Grove hotel here in santa rosa, that was a story were also hearing reports the hilton hotel in santa rosa was also damaged the Paradise Ridge winery also reportedly burned. In napa there are reports of damage at the silverado resort were still awaiting names and the damage estimates are still in the rough stages, but theres also a blaze burning brightly in anaheim. Thats about 500 miles to the south of us in orange county, california, where thousands have been evacuated there back to you guys aditi, thank you very much for that still to come, proctor and gamble Ceo David Taylor will join sara eisen for an exclusive interview following the results of a proxy vote. First, the latest on d. C. s Silicon Valley crackdown and her thoughts on the Mark ZuckerbergVirtual Reality tour through puerto rico. Stay with us, squawk alley is back in a couple minutes you ever call your broker for help . Once, when volatility spiked. And . By the time they got me an answer, it was too late. Td ameritrades elite service team can handle your toughest questions right away with volatility, its all about your risk distribution. Good to know. Thanks, mike. We got your back kate. Does he do that all the time . Oh yeah, sometimes he pops out of the couch. Help from real traders. Only with td ameritrade. Welcome back, Mark Zuckerberg getting backlash after broadcasting a Virtual Reality tour of the devastation in puerto rico following hurricane maria. Take a look. One of the things thats magical about Virtual Reality, is you can get a feeling youre in place rachel and i actually arent even, i think, in the same building, in the physical world. It feels like were in the same place and making eye contact we can highfive. There we go and so now, you know, this is were looking around and, you know, it feels like were really here in puerto rico, where its, obviously, a tough place to get to now and a lot of people are really suffering with the aftermath of the hurricanes. And for more were joined now by maha. This seems like a situation i cant see how they did this without realizing what the optics were, calling it magical, saying it feels like youre there. It does not feel like youre there if youre not hungry and without power, right yeah, they clearly missed the mark on this one it was in poor taste certainly, the laughing, the joking, the highfives, its not something people typically do in disaster scenes. I will give Mark Zuckerberg and facebook the benefit of the doubt. Mark zuckerberg spent a lot of money to highlight issues of disasterstricken areas like this, so i think the intention was not was to highlight the devastation, as opposed to make fun of it. But where does this come from i guess, is it a case of just because you can, does it mean you should, tech is the answer for everything i mean, is this a blindspot, what im trying to ask, that is pervasive across Silicon Valley . This isnt just necessarily a onetime thing i believe its a onetime thing. Its uncharacteristic, certainly, of somebody like Mark Zuckerberg, who has been so sensitive to issues like this in the past, doing his tour across the united states, really trying to connect we certainly havent seen this with many other companies, so i personally think its a oneoff. But at the same time, theres something about it that reminds me of, you know, him saying that to suggest that facebook had a role in meddling with the election, having an impact on the outcome, i guess is what he said, was ridiculous well, its the sense that tech tends to be for the good and not seeing the ways things could go wrong. Two separate issues the result is somewhat the same. The issue associated with the puerto rican hurricane was so unfortunate and, clearly, he was trying to highlight how his technology with oculus and v. R. And a. R. Could allow one to feel like they are there. It just didnt work. Yeah. Clearly, a lot of people felt that way moving on, Silicon Valley remaining under pressure from washington, struggles to realize its role in russian interference during the 2016 president ial election microsoft reviewing its own records for signs of russian meddling so far google, facebook, and twitter have been called to capitol hill to testify in front of congress. Maha, is this affecting the value of startups that play in this space, that could be touched by the kind of regulation that some imagine is inevitable after this . I am a huge viewer of homeland, and this feels like a reducks of the last season where we have russian bots and foreign bots that were infiltrating the social media and really changing the tide of communications or how people viewed it via fake news or fake media. So, yes, it is absolutely something that we are taking in Silicon Valley seriously over the last several years youve seen a spate of Cybersecurity Companies being funded and started and that will not stop i forecast thats going to be a trend that continues for a long time one of the roles that Venture Capital plays with startups is advising on how to handle risks on the horizon are there enough people on sandhill road who have expertise in this particular area that can advise these startups on how to get ahead of the problem absolutely. Again, cybersecurity is a huge area of investment in the venture world. Its an area that has been a huge area for decades. I dont see that changing. Its, in fact, going to expand into areas like bot control, cyberinsurance, et cetera, that really pertain to some of the issues that weve seen over the last couple months what about potential regulation and political blowback now as a risk is there enough insight in that arena . There isnt yet, but i dont see this being dissimilar from other markets, with their ad programs, they have effectively operated in a free market system for a while, and while the political disclosure issues on television are well established at this point, we still dont see political disclosure ads or commentary of the ads within the online arena, where its much cheaper to buy those ads and, frankly, can touch a lot more people so i think thats going to happen thats probably the next step in the political discourse and disclosure aspect. The problem that i see, though, that i feel like were maybe not talking about enough is that the ads that we really need to worry about are the ones that arent, obviously, political. Its not like these russian ads are saying trump for president or hillary for president it was going into wedge issues about transgender rights or black lives matter which wouldnt typically be seen as political ads if they are not obviously political ads, how do you regulate them . And you can imagine thats why facebook and google and microsoft are in this pickle they are in right now. They couldnt regulate it, they couldnt find it they couldnt identify it, so its only expost that were looking at these ads saying, okay, they came from bots or nefarious places its so easy to buy online ads you could do it, i could do it does there need to be more of a vetting process so on the internet Everybody Knows that youre a dog it feels like after this experience we will most likely see some enhanced vetting of the purchasers, yes. Maha, thanks, well see if that happens sara, a busy morning still ahead out in cincinnati. Coming up, much more from you and the p g proxy vote what do we know now, sara . Yes, john, we are waiting to hear from p g chairman and Ceo David Taylor hell talk to us exclusively fresh off of his side declaring victory in this fight that nelson peltz lost his proxy battle to join the board, though we just heard from pelt z himself hes contesting that and its too close to call also a candid answer why he thinks this company and board is fighting so hard to keep him off of it. They did not want me. You know why why threeletter word, ego. Ego ego, okay i threatened the hallowed walls of that boardroom and how dare i do that. And the fact is, that the board needs refreshment. I didnt even call for that. The board needs to really look honestly and openly and say whats wrong with this picture feel that . Thats the beat of global markets, the rhythm of the world. For most, the cadence of today. To us, the pace of tomorrow. Its people and machines uncovering opportunity. Cloud computing providing endless capacity. Blockchain making transactions safer and faster. New markets born where they werent before. With ingenuity, technologies, and markets expertise we create the possible. And when you do that, you dont chase the pace of tomorrow. You set it. Nasdaq. Rewrite tomorrow. Good morning, everyone, im sue herera heres your cnbc news update at this hour. South carolina senator Lindsey Graham speaking to the Charleston Metro chamber of commerce this morning, telling reporters afterwards that americans will judge the president on what he accomplishes and not his personal battles with other politicians. Bob corker is one of the most valuable members of the republican conference, one of the most talented members of the senate his attitude about his job i embrace, which is trying to work with other eople Russias Defense Ministry releasing drone footage showing air strikes against what is said to be isis positions in eastern syria. Russia has accused the u. S. Of trying to fight isis and deliberately reducing its air strikes in iraq to let isis militants to stream into syria a strike is affecting schools, hospitals, and Public Services and causing disruptions in domestic air traffic. Nine Public Sector unions have called for a nationwide strike to protest what they say is a deterioration in work conditions thats the news update this hour back downtown to squawk alley. Michelle, ill send it back to you. I thought they were striking because its tuesday thats how they are over there, sue. I almost had a little smirk on my face when i said deterioration of working conditions there you go yes, yes, i know. Thank you. You got it. Lets get to seema mody now, appropriately, for the european close. European stocks mostly lower. Investors remaining cautious over the decision to declare unilateral independence from spain. Catalonias leader expected to address at the top of the hour regarding a bid for a secession, this after an independence referendum earlier this month that spanish Prime Minister rajoy deemed to be illegal lawmakers say rajoy is calling for new Regional Elections if independence is declared meantime, eu president donald tusk has addressed the Catalan Leader directly, urging him not to announce a decision that would divide spain meantime, the spanish stock market moving lower. Youll see the stock market is down about 1 . The spanish tenyear yield relatively steady today, but we have seen yields spike since the referendum guys, that decision, again, top of the hour. Im surprised the stock market hasnt moved that much in spain, yet at the same time okay, what if he does declare independence they dont have a currency, they are not ready to go. Key point whats he going to do madrid will respond if they do, in fact, declare unilateral independence that will be key, madrids response absolutely would be i think the fact we have only seen such a small decline in spain points to the fact people arent necessarily expecting him to go the whole way with this, and if he does, it wont be an act base case for spain to stick together, despite the movement we havent seen in catalonia is that part of the history historically, and this is going to sound mean when i say it, but historically a bunch of extortionists, right every couple years theyll go to the main government, they want more money, more power, give an inch, next they want a mile, now were at this point. Historically weve seen i get that, but historically its always been settled by throwing more money at them always animosity, to your point, history shows always this animosity between madrid and barcelona. Of course, the catalans make the point they make up 18 of the gdp, thats why they want this independence vote to go through. Thank you, seema. When we return, exgoogler Tristan Harris will join us on set with more on his theory how Big Technology is hijacking our minds. Later, more from john fortts exclusive interview. More squawk alleyafr is teth question. What is an answer and how can you measure the value of one . Today trusted answers from trusted sources are rare and precious commodities. And when industries are undergoing massive transformation, opportunities are only opportunities if you can find an answer that separates fact from near fact. Thomson reuters provides you the intelligence, technology, and Human Expertise you need to find those trusted answers. The answer company. Thomson reuters. Cnbcs exclusive all America Economic survey focusing some of its questions on americans and their technology Steve Liesmann is back at headquarters with consumer response on facebook and apple hey, steve hey, thanks very much the cnbc all america survey, 800 americans polled across the country, we asked them fascinating results about apple and facebook lets start. We asked this question five years ago. How many apple products do you have in your household 2012, half of the country reported having an apple product. 64 now for some pretty strong growth how about how many products there are. Take a look. Its gone from 1. 6 on average to 2. 6. Up a whole apple gadget in the average American Household we also asked about facebook five years ago, is facebook going to be a fad, 21 is it outdated, 10 . Thats come down those who see it as essential has come up. You can see which groups have made the most gains. They include 18 to 24, those with a high school degree, college degree, and some college. Not, however, those with post graduate degrees we also asked how do you use your smartphone. By the way, you can give more than one answer, which is why it totals to more than 100 predominantly emails, text, phone, then you go down, social media, surfing the internet, taking pictures. All these ended up 10 as primary uses, watching videos, playing games, and shopping. By the way, different results for younger women who are more likely to use other aspects here of their smartphones final question, is it productive or is it unproductive . 64 say using their smartphones is mostly productive 27 telling the truth, saying it was mostly unproductive. 8 saying both back to you guys would you say more productive or not . Where would you come in . Very productive no candy crush, words with friends . I dont play games on my phone. I definitely waste times on things like instagram. I cant believe 12 take pictures you didnt have me in that survey its their main focus or main use or the principle give us the one or two things you use your phone for, email, text, phone is in the first place. Selfies but whats really interesting is this group of women 18 to 49. Much more likely to say surfing the internet or things like taking pictures or other social media. Im not a woman aged 18 to 49, but i think id fall in that category steve, thank you very much for that whether its apple, google, twitter, or facebook our next guest warns that technology is becoming more dangerously addictive. In a small number of people in Silicon Valley now have the ability to shape our lives with us to explain, former google designer Tristan Harris, now founder of the nonprofit time well spent. So, in that role, explain, you sort of paid in order to try and work out how best to change peoples minds and opinions and control them you could think of it as how do you ethically manipulate what 2 billion peoples thoughts would be today thats still an instance where the likes of google want to try to aggressively influence what people are thinking its not that just the phone inherently by itself will tap youre Walking Around in an evolutionary meat suit body generated a long time ago, so the Way Technology is designed is going to influence and tap into all of our evolutionary instincts and completely hijacked the ways we have thoughts every day use the word hijack, yet your title was ethicist, so presumably they are implying part of your job should be good for mankind when it comes to manipulating your brain. What did that mean in terms of what you did every day first, its how do you develop a framework for understanding whats it mean to ethically send 2 billion peoples lives that way or that way. Youre going to shape beliefs about the world, so how do you should we rank content by whats shared the most that will be good, but then you raise conspiracy theories and outrage, so thats not ethical to do, so how do you think about that, so i was trying to create a framework and i left to tell the public all the Tech Companies are in a race to addict peoples minds, and its especially harming kids and has implications for National Security tristan, lets bring in john from san francisco, hes got a question hi, traistan. Im curious for your take on this, i sat down with facebooks head of growth during the period of some of its heaviest growth listen to what he had to say about this very issue of individuals being manipulated by data as much as we all believe were individuals, we are. We all act within a range of outcomes that, frankly, can be modelled mathematically and be highly predictive. When you collect those signals and you learn, you can become really good at giving them what they want, but then you also become really good at understanding their behavior, and now unfortunately in some rare edge cases in manipulating, one would hope they are rare, in manipulating their behavior, as well, this whole fake news stuff. So, tristan, my question is, how much of what we need is transparency into exactly what these platforms are doing so that we have some insight into it and maybe can either react or regulate it . Well, we definitely need more transparency, but i think its so much deeper than that, because the level of manipulation thats possible, i can look at your facebook feed and i can know exactly what word choices you use about topics like immigration by scraping your posts, they are public. So i know exactly how you as an individual feel and you dont know that i know that, so then i can advertise to you later and steer you towards content. Im manipulating your psychology without you realizing it i think we have to modify phrases like were giving people what they want, in terms of were good at animating experiences. Can i ask a clarifying question, when somebody uses a specific word and that instantly tells you what you know they believe on immigration, thats because of big data, because youve seen it so often and so pervasively in so many posts yes you can learn from the adjectives people use about certain topics and loop around and advertise to those same audiences later from different websites this is what russia did, and this is what many groups do if they know how to use these tools effectively and theres a National Security threat that facebook has taken ten months to respond to they knew about this far earlier. Of all the big Tech Companies, which has the potential biggest to fall if regulations come in . Facebook is in the center of all this, just because it has the largest influence on peoples day to day beliefs on reality and every day fabric part of peoples lives did you see the story on the front page of the New York Times today they got ahold of the ads and one of the kids whose video ripped off used by the russians. You know what hes mad about he didnt get the clicks, he wanted credit for the clicks, 150,000. Even the victims sometimes dont seem that upset about this i think people often think other people over there can be manipulated, but this Information Campaign went on for a year people use facebook 30 minutes a day. This was seeping into your day to day Background Experience and facebook should be obligated to go back and notify every Single Person who was affected. Theres this line about it was 100,000 to the ad buy, but the posts made it its way to 340 Million People so imagine if facebook, we should hold them responsible and say you have to notify every Single Person who was ever shown a facebook group, an event, a page, that was created by the russians so people know, because people will only believe, for your point, when they actually have the source themselves saying we know this was the russians tristan, were going to have to leave it there. Thanks so much for joining us. Lets get back to sara at p g headquarters with an exclusive guest. Sara hello there i am at p g headquarters with chairman and ceo of this company, david taylor, thank you for joining us here. Im happy to be here. And you are happy with the results . Certainly the preliminary proxy results i am happy about, because it reelected just an Outstanding Team of directors that have been working with us on a major transformation its really starting to show great results. We talked to nelson peltz, he said its too close to call and disagrees with the results what i have is the preliminary proxy results and thats how we represented them, and im thankful the shareholders voted and what we have is support of our existing board, because i think they are doing exactly what they need, actively engaged in helping guide the company towards outstanding results. This was a close one. You expected it to be close. Did you expect it to be this tight . I didnt know what to expect other than we ought to make sure we do a great job conveying our message, strategy, be available to investors and thats what we focused all the energy on, making sure people understand what the strategy is about the transformation, about the fact that were Touching Every element of our Business Model to make it stronger, and to me i felt if we did that well, we respect the wishes of the shareholders, and the preliminary proxy results are ones im pleased with. But it also shows half of your shareholders didnt give you that vote of confidence on the transformation and wanted to bring him as an outsider on to the board. Certainly, theres a desire to see us move faster, and i take the feedback from all investors and where the final vote ends up, but i think, and frankly i know from talking to many investors, they support the strategy do they want to see us move faster im sure, and were moving faster and many ask me about the past, we learn from the past, we cant change the past, but weve learned. The Transformation Plan is addressing all the things we learned, getting the portfolio right, making sure were outstanding to improve the product, package, go to market capability and investing in the organization and the way we build brands, and also improve the financial results. Thats what were working on, and youre pretty late in the transformation what you want to do is continue and deliver results and thats the big message on this, deliver results. Where are you on the transformation were far into it largely done when completing the coding deal back in october of last year. Productivity will be ongoing, because we need that to generate the funds to invest in superior Product Innovation and package innovation and the go to market capability the innovation is also ongoing, and what we are doing is were innovating on how we innovate. Fast cycle innovation, using concepts like leads, small teams that are empowered and stay on a project that have a passion to solve a real Consumer Problem or need those things weve learned and were applying and were very much reaching to outside resources around the world to make sure we have the best ideas, so weve been actively Silicon Valley, china, many other places, to try to work with partners that can accelerate the pace of innovation within p g. One thing i can tell you throughout this, is were open to learn from anybody that can give us ideas to be better thats the driving force of the board, the driving force of the Management Team, and the driving force that gets everybody excited every day to come to work at p g. Peltz says even if he loses, then you should still give him a board seat is that up for consideration no. Even if we the shareholders who vote, well honor the shareholders vote hes a large shareholder we will listen to him as a large shareholder. Whats that relationship going to be like this got messy at certain times. I think the media got it more messy than it did between the two of us, and throughout the process ive talked to him ive meat with his six times, talked with him many times throughout it and all times treated him with respect and he treated me with respect and were going to keep it respectful it ought to be about ideas and things to make a difference for the company, and certainly it was a contested proxy contest. I understand that. You did call him dangerous for the company. Do you regret that not him i said some ideas i think would be harmful to the company. I want to separate that. Im not calling nelson peltz dangerous. I respect nelson peltz hes a successful investor and hes a major shareholder there are ideas that he advocates that i do not think are in the best interest in the short, mid, and especially the long term of the company and i think it would be dangerous to disable our upstream r d that looks at Core Technologies and sometimes innovations that take five, eight years to come to market, but could power many categories for many years. That innovation, if you take too short of a time frame, may not fund and one of the things p gs always done, and we have today, innovating in the category they are in, but i think one of the things thats important is to keep some amount of resourcing to look at at ideas that cross categories, that could be transformational. I think his way is what he advocates is to really introduce that dramatically or eliminate it. I think that would be dangerous to the future of the company. Its ideas that im concerned about, nelson peltz and i will interact respectfully. The stock price, the shares did fall on the back of you announcing these results. I think theyre still down. What does that tell you . I dont follow daily variations in the stock price. What will drive the stock price over time is top line getting better, the bottom line getting better, our cash productivity that allows us not only to pay our dividend and increase it. Daily stock price variations, i dont worry about. You do consider this a victory . I consider this the will of the shareholders voted. And the preliminary proxy results have elected the 11 directors. Im excited about that because everybody thats involved in this, the directors, the Management Team and the Company Wants to get about delivering better results. Thats the work at hand. Are we going to see some changes, a few ideas resonated from peltss proposal, unilever, your big competitor has scooped up these faster growing brands, its not something youve been doing. Youve been focusing on the bigger brands and slimming down the broader portfolio. The core of our growth needs to be driven by brands that are superior that consumers trust. Having said that, there are some categories in each category leader is empowered to decide what is needed to grow top and bottom line better than the participants in their industry. What i dont believe makes sense is to pivot away from large brands that consumers trust, that millennials trust, each cohort trust. Thats not a good decision. If youre about value creation, not just something that comes and goes, then you look at brands like vicks and tide and those brands have been around because we continue to innovate. We will remain open to look at ideas that would extend but one of the things that i think is misrepresented weve gone into new segments. That could be a completely new brand. We tested it as a separate brand and used in the name of downey. It tested better leveraging the equity of downey. Its created 5 million in new sales and growing fast. Is that a new brand . We want to grow the top and bot op. We want to go into spaces where our technology and brands can serve is consumers. We remain open. And each category will look at the right other actions. Did you take any lessons and hear any feedback from shareholders on the culture. Peltz criticized it. Certainly i respect input. What i can tell you across almost every element of the business is were getting input from the outside and select actively we also hire from the outside. I want to reassure the development of p g people is core and it works. P g people not only have risen to Leadership Levels in this country but many other countries across the world have hired p g people. In addition to that, we do believe we needed to pivot and say theres some areas where we could accelerate the growth and in those areas we have gone outside and we have increased amount of external hiring. Its listening to ideas wherever they originate. This company is flipped that. We are connected. You can get a lot of Technology Partners that will site p g as one of the best in connecting with them to Bring Technology whether its universities, small startups or any a variety of resources were very open. And we will remain very open. Peltz said it was ego, thats why the board was fighting him so far against joining this board. Ego on the part of board and management. Its not ego its concern for the future of this company. The board of directors is extraordinarily committed to not only the short, middle but longterm of this company. It just says theyre ready to do whatever it takes to get p g growing at a faster rate. Its not ego. Its a general concern for the future of the company and they believed this was in the best interest of the company. The Senior Management and the employees of this company are committed to build the company. Are we going to see Board Changes . Youre in the vetting process. There will be always be refreshment. A third more than ten, eve got a nice distribution. We have a diverse high powered board that is committed to helping p g. Yes, there will continue to be refreshment. Weve listened to investors. There are some areas theyd like us to see us consider. So well listen to investors and then well assess what is the best move forward. Whats your message to all the other ceos out there that were watching this, the biggest ever company to face a proxy battle, spent a lot of money and i know theres a dispute between the two of you over how much you spent but barely won it. What would you tell them theres only one solution to this and that is deliver better results. The message that ive got is and what were focused on. We started this process several years ago. Deliver better results. As i talk to other ceos and i know theyre concerned with this, the pace that you have to move in order to stay at the lead in your industry its increasingly difficult which is why the changes that were making to transform this company are so fundamental to the future and message to me, to the board to the company is lets do the right things, do them faster and the right way. If you recount this whole vote, and it goes this way, youll welcome him to the board. We will honor the wishes of the shareholder. The preliminary proxy results reelected the 11 directors and were focused at improving this company. David taylor, thank you for coming out and talking to us fresh off of those preliminary results. That is the chairman and ceo of p g live at p g headquarters from cincinnati. Well be right back. Cial is committed to help protect what youve earned and ensure it lasts. Introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. While maintaining a level of protection in down markets. So you can head into retirement with confidence. Talk with your advisor about shield annuities from Brighthouse Financial established by metlife. Welcome back to final thoughts. John on that exclusive couple of interviews that sarah had and it seems that even though we had the votes and results they still disagree on one key point mr. Peltz saying because its so close he still deserves a seat but very cleefrl that mr. Taylor saying otherwise, hell honor the shareholder vote, hell listen to mr. Peltz concern by not via board seat. I cant help but notice that while p g is down about 1. 5 after this result, walmart is up better than 4 as we mention because it appears to actually be moving the needle in part on technology efforts. Its notable that p g has not made acquisitions in tech. They might have to. Peltz might be pushing. Absolutely right and we leave this show with the dow 33 points. That will do it for squawk alley. Halftime starts right now. And welcome to the the halftime report. Our top trade this hour at the New York Stock Exchange the walmart effect. That stock surging to new highs today on the heels of its investor day. Why that run might be far from over with us on set to discuss all of it. Lets begin with the best day for shares of walmart since last may. That stock now at its hi