Disney needed this to go away because they have bigger problems with two separate shareholder activists pushing for seats on the board of directors and another shareholder activist group suing over a deal Disney cut last year with another shareholder group.
HockeyDad wrote:
Disney, Bob Iger Defeat Activist Nelson Peltz in Shareholder Vote
Investors support company’s slate of board nominees; Peltz loses bid to become a director in win for the Disney CEO
WSJDisney DIS -3.13%decrease; red down pointing triangle defeated activist shareholder Nelson Peltz in a bruising fight for influence in the entertainment giant’s boardroom, handing CEO Bob Iger a major victory over one of Wall Street’s most aggressive investors.
The company said Wednesday that shareholders voted to elect its entire slate of board nominees, while Peltz, who has argued Disney needs a fresh voice to hold management accountable, lost his bid to become a director.
Disney said its slate of 12 directors won shareholder support “by a substantial margin.” according to preliminary results.
Shareholders threw their support behind Iger, with the CEO securing 94% of votes cast, while Disney director Maria Elena Lagomasino, whose seat Trian contested, won 63%, according to people familiar. Peltz won 31% of votes cast.
Retail investors—which represent more than a third of Disney shareholders—were particularly helpful. Some 75% of retail investors who cast votes backed the company’s slate.
The outcome of the vote leaves control of the boardroom firmly in the hands of Iger-friendly directors—all but one of whom were appointed on his watch—as the company looks to follow through on a number of major goals, from turning a profit on streaming to reinvigorating a studio business that has lost some of its magic.
“With the distracting proxy contest now behind us, we’re eager to focus 100% of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers,” Iger said in a statement.
He told shareholders at the meeting that the company is now on a more solid foundation, strengthened by its action over the past year. “We have turned the corner,” he said.
The results are a blow to Peltz’s Trian Partners, which has been trying to revive itself after investor withdrawals and a string of employee exits.
“We are proud of the impact we have had in refocusing this Company on value creation and good governance,” Trian said in a statement after the results.
Shares of Disney fell 1.7% in afternoon trading. Before Wednesday, the stock had risen 35% so far this year.
Iger on Wednesday showcased his strategy, pointing to an “incredibly robust slate” of films planned for coming years, including “Mufasa,” “Deadpool and Wolverine” and “Inside Out 2.” He touted a feature film sequel to “Moana” set for release in November and a new season of FX’s “The Bear,” a show that dominated this year’s Emmy awards.
He said Disney plans to make the company’s stand-alone ESPN service available on its Disney+ as a bundled offering, as Hulu now is, and said the company is working on a raft of new experiences at its theme parks.
The corporate showdown was expected to be the priciest proxy fight ever, pitting a titan of the entertainment industry and its blue-chip, celebrity CEO against a pit bull activist and his ally, a fired Marvel executive.
For Iger, who for years won near-universal praise in Hollywood and on Wall Street for his stewardship of Disney—including the vision to pursue deals that brought in franchises like Star Wars and Marvel—Peltz’s proxy fight was an unusual and irritating public rebuke.
Peltz had criticized many areas of Disney’s operations, including that it needed to be more like Netflix, its creative engines had stalled and its sports unit ESPN needed a better plan. However, the argument that resonated the most with investors was that Disney’s board had failed badly at finding a successor to Iger.
Nelson Peltz criticized Disney’s direction on several fronts. PHOTO: CALLA KESSLER/BLOOMBERG NEWS
Despite Disney’s win, the fact it was such a hotly contested fight will put corporate America on notice: any board that fails to carry out proper succession planning could face a reckoning.
“It’s never a zero-sum game, where you simply win or you lose. A substantial vote for the other side is something that the company can’t ignore,” said Wei Jiang, a professor of finance at Emory University’s Goizueta Business School. The Disney-Trian fight stood out because of the focus on succession planning, a relatively rare bone of contention in activist campaigns, she said.
Beating Peltz puts Iger back on the front foot, but he will have plenty of work ahead of him to prove to investors they made the right choice.
One priority: Iger and the Disney board will have to get to work narrowing down a field of potential CEO successors. Iger’s contract runs to 2026, when he has promised to step down.
The top internal contenders include Dana Walden and Alan Bergman, co-chairs of Disney Entertainment, which includes the company’s television, streaming and studio units; Josh D’Amaro, chairman of Disney Experiences, which includes Disney’s lucrative theme parks; and Jimmy Pitaro, chairman of ESPN, which is in the throes of a high-stakes pivot to streaming.
Dana Walden is one of the potential CEO successors at Disney. PHOTO: BRYAN STEFFY/VARIETY/GETTY IMAGES
Iger also must follow through on the various initiatives Disney put forward during the shareholder fight and show that they can deliver returns, including an online sports bundle to be launched alongside Fox and Warner Bros. Discovery.
There is more work ahead in carrying out longer-running initiatives to expand Disney’s sports streaming offerings with an ESPN direct-to-consumer app, while managing a broad structural decline in the cable TV business that has proved challenging to the company and its rivals. Disney also faces rising competition in theme parks, content streaming and family entertainment.
Disney executives and board members, including Iger, visited major institutional shareholders in recent weeks, touting the company’s progress in moving toward streaming profitability and its plans to revitalize its studio—and arguing that it would be problematic and disruptive for the company and Iger if Peltz joins the board. Disney also ran a host of ads encouraging shareholders to support its slate of directors.
Individual investors were expected to have outsize sway, given that they hold more than one-third of shares. While Peltz led Lagomasino for votes in early voting, The Journal reported, Disney was able to turn the tide, convincing large shareholders like BlackRock, Vanguard and T. Rowe Price to support its board nominees.
State Street, Disney’s third-largest shareholder, withheld support for incumbent directors Lagomasino and board chair Mark Parker but decided not to support Trian’s slate, according to people familiar with the matter.
Another twist in this fight was the use of a so-called universal proxy card, which allowed shareholders to mix and match candidates when casting votes, rather than siding with an entire slate over another. This voting method likely played in Peltz’s favor, granting him more votes than he may have received otherwise, experts say.
Peltz, backed by his friend and former Marvel chairman Isaac “Ike” Perlmutter, who lent his more than 25 million shares to the fight, sought seats on the Disney board for himself and former Disney CFO Jay Rasulo. They ran for positions held by incumbent directors Lagomasino and Michael Froman.
Trian spent weeks traveling to meet with investors, at times seeing the same shareholders multiple times to make its case, portraying Disney’s board as complacent and beholden to the will of a CEO who struggles to let go.
As investors cast their votes, Peltz and Elon Musk discussed the possibility of the Tesla CEO weighing in to support Trian. Musk called some investors to help Peltz win votes and on Wednesday morning publicly endorsed him on Twitter.
The hedge fund appears to have so far profited from its Disney investment, given that the stock has gone from well under $100 to around $121 since Trian arrived.
A separate activist campaign by Blackwells Capital, which sought to add three board members, failed to get much traction in part because the firm held a comparatively small stake in Disney’s stock. Blackwells said in a statement Wednesday it achieved its primary objective—preventing Peltz from getting elected.
