Shares of chemicals manufacturer DuPont & Co. (NYSE: DD – $69.33) closed sharply lower by about 7 percent on news that the company had turned back Nelson Peltz and his investment firm Trian Fund Management LP in their ongoing and bitter proxy fight. Trian had tried to get DuPont to take actions it believes would optimize value, including the separation of certain businesses from the company’s other operations. For its part, DuPont argued that the best way to enhance shareholder value was to keep its businesses together, and focus on improving efficiency while investing in sectors with attractive growth prospects. I have supported the latter argument for DuPont. At the same time, Trian was seeking seats on DuPont’s board of directors, which shareholders voted on at the company’s annual meeting. Preliminary results indicated that all 12 of DuPont’s nominees were elected to the board, defeating Trian’s nominees, including Petlz. Clearly, the sell-off in DuPont shares reflected investor disappointment that Trian would be unable to implement actions that had the potential to increase shareholder value in the short-run, but DuPont’s total return performance over the past several years has been quite satisfactory as compared to the overall equity market. However, since the vote was close, it sent a strong message to DuPont’s board, and I believe we will see some significant moves over time to further improve shareholder value. For now, management can get back to business and increase its focus on efforts to improve its operating performance. I believe the shares will rebound once today’s news is history. This good-quality stock has decent risk-adjusted total return potential through late decade with a yield of 2.6%. DuPont earns high marks for safety and stability and has a strong balance sheet. The shares can be retained in a well-diversified income portfolio for recovery.