ISS has advised investors to back Peltz and two other dissident nominees. A second advisory firm endorsed Peltz and one Trian nominee, while a third firm urged shareholders to vote for Peltz. (For more details on the ISS vote recommendation, see the last section of this article.)

Trian, which has faulted Heinz's financial performance under CEO William Johnson, has called on the maker of ketchup and other food products to sell assets and make $575 million in spending cuts. In response, Heinz has moved to make $355 million in cuts, cut 2,700 jobs, and undertake a $1 billion share buyback. The company also has adopted governance reforms, including majority voting for director elections, and hired a search firm to recruit two more independent directors.

On Aug. 10, Heinz announced that CalPERS, the nation's largest public pension fund, would suppport management. The day before, the Amalgamated Bank's LongView Collective Investment Fund said it would back the incumbent nominees. Earlier, the AFL-CIO endorsed the management slate and identified the Heinz contest as the first of its "key votes" for the 2006-07 proxy season. According to the labor federation, "the Trian nominees failed to demonstrate that they are better qualified to build shareholder value." The CtW Investment Group, which is affiliated with the Change to Win union coalition, also has endorsed management.

Most of Heinz's other institutional investors have not disclosed which side they will support. Trian likely will have support from other hedge funds, which traditionally support dissidents in proxy fights.

With less than a week before the annual meeting, Trian and Heinz have issued dueling press releases on voting mechanics. Trian urged investors to vote its "gold" proxy card, even if they don't plan to support all five dissident nominees. Heinz has called on shareholders to use the company's "white" proxy card to support all 12 management nominees. Heinz argues that investors who use the dissidents' proxy card to vote for any Trian nominees will not be able to cast write-in votes to support any of the five management nominees targeted by the dissidents. However, Trian points out that investors who try to write in the names of any dissident nominees on management's proxy card could have their votes deemed invalid.

Peltz, who describes himself as an "operational" activist, has had success in seeking board representation in the past. In March, he persuaded Wendy's International to install three of his board nominees after calling on the hamburger chain to improve its results and consider selling its Baja Fresh restaurants. In making his case to Heinz investors, Peltz has pointed to his experience at other companies, such as beverage maker Snapple, which he bought for $300 million in 1997 and sold for $1.5 billion four years later.

"We've spoken to all major shareholders, and we've gotten a very positive reception," Peltz told the Reuters news service.

Politicians Express Concern
The contentious proxy contest has also attracted the interest of Pennsylvania politicians. On July 19, eight members of Congress from the state wrote to Pennsylvania Attorney General Thomas Corbett, expressing concern about "the potential harm to shareholders, employees, and communities"' from Trian's bid for board representation, according to the Associated Press. The mayor of Pittsburgh and two state lawmakers also wrote to Corbett, warning that Peltz's growth strategy may lead the company to move from Pittsburgh, its headquarters for 137 years. A Trian spokeswoman said the dissidents, if elected, would not recommend that the company leave Pittsburgh, AP reported.

Pennsylvania officials have a long history of intervening in corporate disputes. The state has one of the most extensive arrays of anti-takeover statutes. In 1990, Pennsylvania adopted control-share acquisition provisions as Armstrong World Industries tried to defeat a bid by Canada's Belzberg family. In 2002, then-Attorney General Mike Fischer sued to block an auction of Hershey Foods by the charitable trust that owns the company. Fischer argued that job and tax revenue losses from a sale could devastate the Pennsylvania community where the company is based.

Earlier this year, state lawmakers rushed to approve legislation to help Sovereign Bancorp fend off a bid by Relational Investors to remove Sovereign's CEO, despite complaints from investor advocates that the law would hurt shareholder rights. Sovereign and Relational reached a settlement in March.

ISS Backs Three Trian Nominees
In the Heinz proxy fight, ISS has advised investors to support Peltz and two other Trian nominees, golfer and entrepreneur Greg Norman, and former Snapple executive Michael Weinstein. The vote recommendation was based on the ISS benchmark governance policies.

In its recommendation, ISS noted that the dissidents would bring consumer marketing expertise to the board and would help keep the pressure on management. "In speaking with industry analysts and long-term shareholders, we were told that the company has a long history of over-promising and under-delivering. Shareholders expressed fatigue from year after year of meetings in which management promised things would be better soon. The company claims that those days are over, but we believe that the presence on the board of three of the dissidents' nominees would keep management's feet to the fire," the ISS recommendation noted. "On balance, we conclude that the presence of three of the dissidents on the Heinz board would likely prove beneficial to long-term shareholder value. The long-term financial and operational performance of the company and the dissidents' skill sets and track record establish both the need for change and the dissidents' ability to effect change."

Meanwhile, the ISS Taft-Hartley Advisory Services unit, which advises labor unions and their fund managers, has endorsed the full management slate. That vote recommendation was based on the AFL-CIO's voting guidelines and input from labor union clients.

In addition to its benchmark and Taft-Hartley policies, ISS offers a broad selection of voting guidelines, including an environmental and social policy, a public fund policy, a faith-based policy, and a variety of policies that reflect local market practices across the world. ISS' Governance Research Service also provides non-recommendation research. This range of offerings allows institutions to subscribe directly to the policies that reflect their own corporate governance philosophies or those of their underlying clients.

For more on the arguments by Heinz, please visit here.

For more argurments by Trian, please visit here.