By Nadia Damouni and Mike Stone
NEW YORK (Reuters) - DuPont's (N:DD) board is open to a negotiated settlement with activist Trian Fund Management in the run-up to the company's annual shareholder meeting in May, sources close to the matter said on Monday.
Despite the stalemate between the chemical conglomerate and the New York-based fund, DuPont's "doors are not barred for something reasonable," one of the sources said.
On Monday, U.S. proxy advisory firm ISS recommended that DuPont shareholders vote in favor of Trian co-founder Nelson Peltz joining the company's board, a shot in the arm for the activist investor ahead of voting on May 13. The firm also backed another Trian nominee but did not recommend two others.
Trian, DuPont's fifth-largest shareholder with a 2.7 percent stake, has argued that DuPont should split its businesses to unlock greater value for shareholders. The company claims Trian would seek to establish a "shadow management" team that would undermine the company's strategic transformation.
The two sides have not held discussions for months, said another person close to the matter. Spokespeople for DuPont and Trian were not available for comment.
DuPont has maintained that it is open to a constructive dialogue with Peltz's camp but has not signaled what that could include.
In February DuPont offered to give one of Trian's nominees, John Myers, former chief executive officer of GE Asset Management, a seat on its board.
But Trian rejected that proposal and in March, the fund launched a proxy battle for four board seats, including one for Peltz, its chief executive officer.
DuPont has said it could accommodate one of Trian's nominees but not Peltz himself. ISS, the proxy firm, also recommended that shareholders vote for Myers.
In response, DuPont said on Monday that ISS had reached the "wrong conclusion" in failing to recommend that shareholders vote for all 12 of DuPont's directors.