Nelson Peltz says Disney’s board, not Bob Iger, is the problem.
Just over a week before Disney’s annual shareholder meeting on April 3, Peltz’s Trian Group — which has been campaigning aggressively for two seats on the Mouse House board — issued a new statement saying the fight is not related to any dispute with the CEO. Bob Iger But rather about forcing a change in the composition of the board of directors to enhance the company’s financial returns.
“In this election contest, Disney has asserted that Mr. Iger is admired and respected (including, for example, by providers and advisors), which we have no doubt about,” the hedge fund said in the statement. “Trian supports Mr. Iger as a candidate for the board and as CEO. That Disney has spent so much time and ink defending Mr. Iger — while saying almost nothing about the two director nominees whose re-election Trian represents a challenge — is troubling and telling. This campaign is not about Iger, nor is it a referendum on his leadership. In any case, Disney is, and should be, more than just one person, especially one whose contract expires in less than two short years.
Trian’s statement asserts that Disney’s board “subverted its most important mission — CEO succession — by appointing Bob Chapek to the role apparently without proper vetting or oversight. The board then renewed Mr. Chapek’s contract just months before firing him for poor performance.” Ultimately, the board had to call Bob Iger out of retirement to fill the void.
Disney described Trian’s proxy battle as “devastating and destructive” and said that “Peltz’s endeavor also seems more about vanity than faith in Disney.” The media company described Trian’s campaign as being fueled by a “long-standing personal agenda” embraced by former Marvel Entertainment chairman Ike Perlmutter against Iger. Trian controls approximately $3.5 billion in Disney stock, 79% of which is owned by Perlmutter. Last year, Disney terminated Perlmutter’s employment.
Investors vote on slate of competing board candidates – Disney’s own 12-member lineup; Two were nominated by Peltz’s Trian Partners (Peltz himself and former Disney CFO Jay Rasolo); Or three from another investment firm that has entered the fray, Blackwells Capital. In the weeks leading up to the April 3 meeting, Disney and Iger received support from George Lucas (Disney’s largest individual shareholder), former Disney CEO Michael Eisner, major shareholder Laurene Powell Jobs, and descendants of Walt Disney and his brother Roy O. Disney, and agency consulting firm Glass Lewis.
Disney faced a setback in the battle with Peltz last week when influential consulting firm Institutional Shareholder Services (ISS) recommended shareholders elect Peltz to Disney’s board (but not Rasulo). In its report, ISS noted Disney’s “botched” CEO succession planning and said Peltz “could be an addition to the succession process, providing assurance to other investors that the board is properly engaged this time.” (Disney CEO Mark Parker responded, “We strongly believe that the ISS reached the wrong conclusion.”)
Trian called Disney “the world’s most distinguished consumer entertainment company,” but claimed it had “woefully undercut its own potential and that of its peers, costing shareholders more than $200 billion in value.” Trian urged Disney shareholders to vote for Peltz and Rasulo and to withhold support from two current Disney directors, Maria Elena Lagomasino and Michael Vroman. ISS also recommended that Disney shareholders withhold votes for Lagomasino, who is CEO and managing partner of WE Family Offices.
“We believe that re-election of the current board will have the predictable effect of leading to more of the same: questionable decisions about strategy and capital allocation, poor executive compensation and suboptimal succession planning,” Trian’s March 25 statement said. .
In her statement, Trian reiterated that she “believes that Disney’s problems lie with the Board of Directors, which lacks focus, alignment, and accountability. Although the Board members are consummate professionals, they are extremely busy, have invested almost none of their money in Disney stock and have failed to Responding to investor contributions The result has been questionable strategic and capital allocation decisions, including investing $200 billion of capital with no discernible return, a clear lack of alignment between executive compensation and shareholder value creation, and financial results in the latest year that pale in comparison to last year. Results five years ago.
The full message is available at this link.
Disney’s Annual Shareholder Meeting will be held on Wednesday, April 3, at 10 a.m. PT via a virtual meeting at virtualshareholdermeeting.com/DIS2024 and will be available via webcast at disney.com/investors.