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Emerson, long known for solid profits and a no-nonsense management style, might seem an unlikely target for an activist investor looking to attack bloated costs.

Nevertheless, New York investment firm D.E. Shaw laid out a lengthy list of shareholder complaints last week in a blistering letter to Emerson directors. It accuses the Ferguson-based industrial company of incurring overhead expenses as much as $1 billion too high, overpaying top executives and maintaining a collection of businesses that should be split apart.

The letter makes some good points. Some of Emerson’s governance practices, such as having directors serve staggered three-year terms, are unfriendly to shareholders. The company could do more to align Chief Executive David Farr’s pay, which totaled $15.6 million last year, with results.

By pointing out that Emerson’s fleet of eight jets and one helicopter costs $20 million a year, and that Farr took $359,000 of personal flights on the jets last year, D.E. Shaw has highlighted an issue that may embarrass management and rankle other shareholders.

The broader allegation about bloated costs, though, isn’t so clear-cut. Emerson regularly posts industry-leading profit margins, which would be impossible if it didn’t control expenses.

Emerson contests one of D.E. Shaw’s specific examples of inefficiency. The hedge fund says the company operates out of 16 locations in the Houston area alone; Emerson says that number appears to be eight years old and reflects sites used by companies Emerson bought. It has consolidated several of the operations.

“They are very focused on lean manufacturing and maximizing the utilization of the space they have,” says Jeff Windau, an analyst at Edward Jones. “If you look at the bottom-line margins, they’re as good or better than most of their peers.”

D.E. Shaw isn’t alone in saying Emerson could unlock value by splitting itself into two companies, one focused on industrial automation and the other on tools and air conditioning technology. Other analysts have been suggesting such an action for years.

Some of them disagree, however, with D.E. Shaw’s estimate of the potential gains from such an action. Its letter says Emerson could increase its value 20% with a spinoff alone, or 50% if it also pursues aggressive cost-cutting.

“I have seen other calculations that don’t get nearly that much upside,” Windau says.

Rob McCarthy, an analyst at Stephens Inc., says the gains D.E. Shaw envisions would be possible only after three or four years, and only “through the prism of a new industrial economic upcycle.”

In other words, he thinks the economy needs to get better before Emerson can unlock the value hidden in its various businesses. Higher oil prices would help a lot, because Emerson’s automation business relies heavily on the oil and gas industry.

To its credit, Emerson already began taking a hard look at costs when it saw the economy slowing this year. It also announced a broad review of its business portfolio on Oct. 1 after reports that D.E. Shaw, which owns a little more than 1% of Emerson’s shares, was agitating for change.

The company probably would prefer to conduct that review away from public scrutiny. It has gone through similar processes before, as in 2015 when it decided to sell a problematic network power business.

This time, the presence of an activist shareholder may not change the ultimate decision, but it increases the pressure on Emerson management to explain and defend its actions. If D.E. Shaw disagrees with any of them, it will surely let everyone know.

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