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Saturday, June 22, 2024

Déjà Vu: Nelson Peltz Officially Launches Proxy War Against Disney’s Board of Directors

As voting for The Walt Disney Company’s annual meeting grows closer, activist investor Nelson Peltz ratchets up his campaign to upset the status quo.

What Happened?

In the lead up to Disney’s proxy season, where shareholders vote on new board members, investor Nelson Peltz has thrown his hat in the ring.

On Thursday, Peltz’s Trian Partners filed a preliminary proxy statement with the SEC. These statements are filed prior to annual meetings. The purpose of a proxy statement is to provide shareholders with the information necessary to make informed decisions during a vote. This filing by Trian Partners officially enters Peltz into the race of contenders for a seat on Disney’s Board of Directors. Soon, all Disney shareholders will have the chance to vote for Disney’s nominations for the two open Boards seats or instead vote for Peltz’s nominations.

This is Nelson Peltz’s second attempt to wage a proxy war against the existing board. He dropped out of the race prior to the annual meeting last year.

Pictured: Trian CEO Nelson Peltz. (Source: CNBC)

What Does Peltz Want?

Nelson Peltz is what the media labels an ‘activist investor.’ Not to be confused with a corporate raider in scope, Peltz campaigns to be voted onto boards by shareholders who are disappointed by the existing board’s performance. The board’s role is primarily oversight of the executive team. At Disney, the board has been severely lacking in its judgement, letting Chapek wreak havoc for years, just to bring back Iger who has done little since. Also, Disney’s Board of Directors rubber stamped Iger’s $71B acquisition of 21st Century Fox, which has proved disastrous for Disney’s balance sheet. Most egregiously, Disney’s Board allowed Iger to continually extend his tenure while refusing to name an heir apparent.

Peltz highlights poor performance of Disney stock under current board compared to S&P and media peers. (©Trian)

In an effort towards change, Trian Partners CEO Nelson Peltz and former Disney CFO Jay Rasulo are seeking seats on Disney’s Board of Directors. This prospect is one the existing Disney leadership strongly opposes on spurious grounds such as ‘lack of media experience.’ On that note, Nelson said “They [say] I have no media experience. I don’t claim to have any. But I would tell you, I don’t think they have much ‘media experience.’ They broke a record this year. Did you know that the last five movies in a row were losers? Now if that comes with ‘media experience,’ I want a guy who doesn’t have ‘media experience.’

On the matter of adding Peltz and Rasulo to the board, Nelson said the following in Trian’s proxy statement. “Disney is resisting change and asking shareholders to endorse a Board…who [has] repeatedly failed to properly plan for CEO succession, misaligned the incentives of management, and failed to oversee or drive a strategy to get the streaming business to profitability or the studios to produce good content. Are Disney shareholders really to believe the current Board is able to heal these self-inflicted wounds?

What Would Peltz Change?

In Trian’s preliminary proxy statement, they highlight their initiatives in 5 areas:

Peltz’s Preliminary Platform for Change at Disney. (©Trian)

Former Disney CFO Jay Rasulo added, “Nelson and I are not about strategic platitudes or soft goals. As Disney Board members, we would expect to help drive Disney’s financial performance by working with other Board members to set demanding but realistic goals.”

Mr. Peltz further notes that “We will have much more to say about these goals…when we release our full presentation to shareholders.”

You can find more of Peltz’s statements on his campaign site, RestoreTheMagic.com.

What’s Disney Saying?

On Tuesday, The Walt Disney Company filed a preliminary statement with the SEC ahead of voting season. In it, Disney states: “The Board does not endorse the nominations of Nelson Peltz and James Rasulo put forth by Trian Fund Management, L.P. …The Board recommends that shareholders do not vote for the Trian Group nominees, and that they reject a related proposal from the Trian Group to amend the Company Bylaws.”

Headquarters of The Walt Disney Company in Burbank, CA. (©Disney)

When is the vote?

Shareholders will soon begin voting on who should make up Disney’s board. The exact date of the annual meeting will be released after Disney reports earnings on February 7th, 2024. With that release, we will get official proxy materials directing shareholders when and how to vote.

FINANCIAL DISCLAIMER: This post does not in any way constitute financial advice. Please consult your financial advisor before making financial decisions. While the statements in this article have been checked for accuracy, the accuracy of the information cannot be guaranteed. Always do your own research before making important financial decisions.

Brayden produces quality Disney news commentary videos at Mickey Views. He is also working on feature-quality documentary films at "Address Unknown."


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