In a market that has been trending down, with many names taking a pasting, Motley Fool Income Investor selection Heinz (NYSE:HNZ) has actually been trending up over the last few months. This isn't because of any real improved performance on the part of the company. No, it's rather because of the involvement from Nelson Peltz and his colleagues at Trian Fund Management and Sandell Asset Management, and what is shaping up to be a good old-fashioned proxy battle.

Since February, there have been discussions back and forth between Trian and Heinz. Trian, which owns 5.4% of Heinz' outstanding shares, has been seeking five seats on the board of Heinz, and yesterday, Trian's proxy materials were made available on the SEC site. The proxy materials detail Trian's plan to unlock value at Heinz via cost cuts, share repurchases, increased marketing and product development, and increased dividend payouts.

The plan also highlights the performance of management at Heinz over the last eight years and how badly management has underperformed food-service peers Hershey (NYSE:HSY), General Mills (NYSE:GIS), and Wrigley (NYSE:WWY), as well as management's own goals over the years. Of particular interest is the revenue per employee and sales per plant that Heinz generates in comparison to a number of its competitors, and the increase in SG&A as a percentage in revenue over the last eight years at Heinz. With the money saved on SG&A and on allowances that the company makes to retailers for marketing support, Trian recommends that the company focus on new product development and increased advertising.

Later in the day, Heinz filed its proxy response to shareholders. It stated that it had received the materials from Trian and that the company's response will be based on the materials submitted by Trian and Mr. Peltz, Mr. Peltz' record, and what it believes is in the best interest of all shareholders. The company also stated that it will reveal its own plan for improving shareholder value on June 1 and that the plan will include many of the topics addressed in the letter from Trian.

I don't have a direct interest in Heinz shares, but I do have a beneficial interest through a small holding in a family member's account. On the surface, I have mixed emotions about shareholder activism, as I've seen long-term good done, but also disastrous short-term thinking.

Having looked over the plan from Peltz and Trian, I believe the portions of the plan involving SG&A reductions, more efficient allocation of advertising and allowances to retailers, target dividend payout rates, and product development all deserve serious attention, and Trian may be able to provide assistance. That said, Heinz should focus on these areas first before tackling the Trian recommendation to take on additional debt to fund share repurchases. Such a strategy can work wonders, and the company does have the cash flow to support a higher level of debt, but the repurchases will have the most dramatic effect only if the company's management and board are committed to the rest of the strategy.

Heinz is a Motley Fool Income Investor pick. Take the newsletter dedicated to dividend payers for a 30-day free trial.

Nathan Parmelee has a beneficial interest in shares of Heinz, but has no financial interest in any of the other companies mentioned. The Motley Fool has an ironclad disclosure policy.