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Disney appears to have staved off a board challenge from activist investor Nelson Peltz, handing victory to CEO Bob Iger, ending one of the most expensive and closely watched board battles in history.
The entertainment giant received enough shareholder support to beat Peltz in his bid for a board seat, according to two people familiar with the matter, with major investors including Vanguard and BlackRock backing Disney.
All 12 of Disney's nominees to the board are scheduled to be elected, these people said, in a painful loss for Peltz, who announced in October that he would renew his proxy fight against the company, and for Blackwells Capital, another activist who fielded three nominees. .
Peltz's Trian Partners called on shareholders to appoint him and former Disney executive Jay Rasulo to the board and to deny seats to two current Disney executives: Michael Froman and Maria Lagomasino. Disney is scheduled to announce the results at its annual meeting on Wednesday.
While Peltz did not seek to oust Iger, the fiery contest was more of a referendum on the CEO's ability to turn around Disney's fortunes. The veteran activist investor has dismissed Iger's recent initiatives to boost Disney stock as “throwing spaghetti at the wall” to see what works.
The 81-year-old billionaire called on Disney to cut costs and achieve “Netflix-like” profit margins in its streaming business, while criticizing its “woke” film strategy, recently telling the Financial Times: “Why should I have… .. Marvel that this is all women? .. Why do I need an all-black cast?
A vote of confidence would bolster Iger, widely considered the most powerful executive in Hollywood, as he tries to guide Disney through a painful transformation.
While the vote result is a blow to Peltz, Disney's stock price has risen more than 50 percent over the past six months, even as it remains well below the highs it reached three years ago.
The competition divided influential dealer advisors, with Glass Lewis recommending shareholders support Disney, while ISS recommended adding Peltz to the board.
In addition to Vanguard and BlackRock, Iger has the backing of major investors including T Rowe Price and Norges Bank Investment Management.
Peltz's backers included Calpers, the California Public Employees' Retirement Fund, which said Disney would benefit from “fresh eyes,” and Neuberger Berman.
About a third of Disney's shareholder base is made up of individuals — many of whom are passionate about its parks and characters.
The proxy battle has played out like a political campaign, with each side pouring tens of millions of dollars into fliers, phone calls and videos imploring shareholders to “vote white” for Disney, or “vote blue” for Trian.
Disney spent $40 million on the proxy fight, while Trian invested $25 million and Blackwells invested $6 million in its campaign.
Iger, who at one point considered running for the White House, recruited business leaders and personal friends to vouch for him. The likes of JPMorgan Chairman Jamie Dimon, Star Wars creator George Lucas, Laurene Powell Jobs, and Walt Disney's descendants have thrown their support behind Iger.
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Fending off activists, Iger unveiled a host of initiatives to appease investors: raising Disney's free cash flow target, announcing a $1.5 billion investment in Epic Games, promising sharp cost cuts and announcing a 50 percent dividend increase as well as a stock buyback. Worth 3 billion dollars
Among Peltz's biggest complaints was the botched succession process for Iger, reviving an issue that has dogged Disney for decades, as its CEOs were reluctant to retire. Iger repeatedly extended his contract during his tenure as CEO from 2005 to 2020, and his successor, Bob Chapek, was fired after less than three years.
“The leadership changes have been an Achilles heel for Disney,” Needham analyst Laura Martin said. “Succession will be the most important test for the new board, regardless of who it is.”
Disney declined to comment. Trian did not respond to requests for comment.
