Disney Board Election Sparks Proxy Battle

Disney Board Election Sparks Proxy Battle

Disney shareholders are gearing up for a contentious board election as activist investment firms vie for influence within the entertainment giant. Trian Fund Management, which holds a significant stake in Disney, has nominated two individuals to the board – co-founder Nelson Peltz and former Disney CFO Jay Rasulo. In a surprising move, proxy advisory firm Institutional Shareholder Services (ISS) has recommended that Disney shareholders vote for Peltz at the upcoming election. ISS highlighted Disney’s “multi-year underperformance” and the need for change on the board.

Trian has been critical of Disney’s poor performance and cited the company’s earnings per share (EPS) figures, which were lower than a decade ago despite significant capital investments. The firm also pointed out that Disney’s Direct-to-Consumer business and consolidated media operations have lagged behind peers in terms of margins. Trian’s nominee, Nelson Peltz, aims to “restore the magic” in the company and has outlined his vision in a detailed 133-page memo.

ISS’s recommendation in favor of Peltz carries weight in the selection of board members and may sway voters. However, Disney has expressed disagreement with ISS’s recommendation, stating that Peltz does not bring additive skills to the board and lacks a meaningful plan to deliver superior shareholder value. The company believes its 12 board nominees are best qualified to provide diligent oversight of management and create sustainable shareholder value.

In addition to Trian, another activist investment firm, Blackwells Capital, has announced three nominees to the board. However, ISS has recommended that shareholders not vote for these candidates. Blackwells claims that its nominees possess invaluable expertise that Disney’s current board lacks.

ISS’s recommendations have favored 11 out of 12 Disney nominees and one out of two Trian nominees, while none of Blackwell’s nominees received support. The advisory firm noted Disney’s underperformance compared to the S&P 500 and highlighted the board’s role in the company’s challenges over the past five years.

This board election is reminiscent of a proxy fight Disney faced two decades ago when over 40 percent of shareholders voted against the company’s board. ISS’s recommendation to support the activists played a crucial role at that time. Disney’s current nominees have garnered support from influential individuals, including the Walt Disney family and Star Wars creator George Lucas.

Despite the tensions surrounding the election, Disney remains confident in CEO Bob Iger’s ability to drive long-term value. Iger, who retired in 2021 but returned in 2022 after his successor’s ousting, is seen as a key figure in navigating the company through difficult times.

As Disney shareholders prepare to cast their votes on April 3, the battle for board seats intensifies. The outcome of this election will shape the future direction of one of the world’s most iconic entertainment companies.