Disney successfully defending its board of directors agains a challenge from activist investor Nelson Peltz, confirming a decisive triumph for CEO Bob Iger and calling a halt to what has been one of the costliest and most scrutinised boardroom conflicts in history. The media titan declared on Wednesday that shareholders had supported its twelve nominees with a significant majority. Major investors such as Vanguard and BlackRock were behind Disney, a noteworthy setback for Peltz’s Trian Partners.
Disney’s shareholder base comprises principally of individual investors – many are fans of its theme parks and characters. About 75% of these retail shareholders cast their vote for Disney’s choices, according to someone with insider information. The source also revealed only approximately 31% of all shareholders supported the idea of Peltz joining the board.
The outcome concludes one of the most heated proxy wars in several years, which began in January 2023 when Trian revealed a considerable investment in Disney. The dispute, which Peltz’s firm initially cancelled in February, flared up again months later, supported by a larger stake worth roughly $3.5 billion (€3.2 billion). Ike Perlmutter, a former Marvel executive and Peltz’s long-time associate who was dismissed from Disney the previous year, threw his shares into the ring.
Peltz had called on shareholders to elect him and former Disney executive Jay Rasulo to the board, and reject the current Disney directors Michael Fromman and Maria Lagomasino.
Blackwells Capital, another activist group, proposed three nominees, but they were also unsuccessful in the vote. Blackwells stated its “main objective”, was to prevent Nelson Peltz from being part of the Disney board.
Although Peltz had not sought to remove Iger, the intense battle was seen as a vote on the CEO’s capability to boost Disney’s prospects. Peltz, a seasoned activist investor, belittled Iger’s recent endeavours to strengthen the media company’s shares, describing them as “throwing spaghetti at the wall” in the hope something would stick.
The aged tycoon of 81 years challenged Disney to reduce expenses and achieve profit margins similar to Netflix in its streaming segment, criticising its liberal-oriented film tactics. He queried in Financial Times: “Why must we employ an all-female Marvel cast, or a wholly African-American cast?”
The affirmative vote will fortify Iger, who is widely perceived as the paramount executive in Hollywood, as he attempts to navigate Disney through profound changes.
“I would like to express gratitude towards our investors for their faith in our board and administration,” Iger expressed. “Having put the disruptive shareholder contest behind us, we are keen to concentrate entirely on our principal areas of concern: expansion, shareholder value, and maintaining high-quality content for our consumers.”
Disney’s stock value has ascended over 50% in the last half year, however, it still languishes below the peak levels it achieved three years prior.
There was a division among influential shareholder advising firms during the contest, with Glass Lewis advocating for Disney, while ISS pushed for adding Peltz to the board.
The shareholder contest was akin to a political campaign, with both factions investing heavily into campaigning materials, phone outreach and videos, beseeching investors to back Disney with a “white vote”, or support Trian with a “blue vote.”
Disney shelled out $40 million on the proxy contest, with Trian and Blackwells allocating $25 million and $6 million, respectively.
Iger, who once deliberated on a political career, garnered endorsements from prominent business figures and personal acquaintances. Names such as JPMorgan’s Jamie Dimon, Star Wars inventor George Lucas, Laurene Powell Jobs and Walt Disney’s grandchildren were among those who endorsed him.
In an attempt to deter the activists, Iger announced a series of strategies that were geared towards pleasing investors: he raised Disney’s free cash flow goal, pledged a $1.5 billion investment into Epic Games, proposed substantial cost reductions, and heralded a 50% hike in dividends as well as a share buyback worth $3 billion.
Peltz’s main grievances were centred around the flawed succession plan put in place by Iger, a subject that has plagued Disney for years due to the unwillingness of its CEOs to step down. Iger extended his contract multiple times during his time in office from 2005 to 2020. However, Chapek, his successor, was removed from his position in less than three years.
“Disney’s leadership transitions have always been its weakest link,” noted Laura Martin, an analyst from Needham. “No matter who constitutes the new board, managing succession effectively will be their biggest challenge,” she added. This information is protected by the copyright laws of The Financial Times.