Disney and activist investor Nelson Peltz gear up for a proxy fight

Disney and activist investor Nelson Peltz gear up for a proxy fight

On Wednesday afternoon, Walt Disney Company officials announced their opposition to activist investor Nelson Peltz’s bid to join the company’s board of directors. In addition, Disney appointed Mark Parker, the current executive chairman of Nike, as its new chairman.

Soon after, Trian Fund Management, Peltz’s employer, stated that it had nominated Peltz to Disney’s board. According to Peltz, Disney “lost its path” and as a result, “its financial performance rapidly deteriorated.” Wednesday’s closing price for the stock was $96.33. Disney stock was worth around $160 a share a year ago.

The declarations foreshadow a massive and chaotic battle. Trian Investment Group invested over $800 million and has been lobbying for a board seat for nearly two months. According to a statement released by the company on Wednesday, Trian plans to implement operational changes and save expenses. This company has announced that it would submit a proxy statement to federal regulators on Thursday.

Trian added that it had no plans to find Iger’s replacement. On the contrary, Trian stated that it is interested in collaborating with Iger to facilitate a smooth CEO transfer within the next two years.

Using Bob Iger and the Disney Board, “Trian’s goal is to build sustainable, long-term value at Disney,” the company explained. We are fully aware that Disney is going through a moment of profound upheaval, and we have no intention of adding to the company’s current state of flux.

Disney announced earlier on Wednesday that it had rejected Peltz’s overtures, beating Trian to the punch.

“While senior leadership of The Walt Disney Company and its Board of Directors have engaged with Mr. Peltz numerous times over the last several months, the Board does not endorse the Trian Group nominee and recommends that shareholders not support its nominee, and instead vote for all the company’s nominees,” Disney said.

A new head of state

After a year in which the entertainment giant’s stock suffered due to rising streaming charges and a depleted schedule of theatrical releases, new turmoil has erupted at Disney.

Parker will replace Susan Arnold as Nike’s executive chairman. After Disney’s upcoming annual meeting of shareholders, which will be her 15th, her contract will expire. There has been no word on when exactly this meeting will take place. Upon Arnold’s resignation, the number of Disney’s board members will drop from 12 to 11.
Arnold said in a statement on Wednesday that Iger is “uniquely positioned to chair the Disney Board during this period of transformation” because, during his four decades at Nike, Iger oversaw one of the world’s most recognized consumer brands through various market evolutions and a successful CEO transition. Parker joined Disney’s board seven years ago.

After an unexpected absence in November, Iger returned with the promise of revitalized development during his two-year tenure. After the disastrous stint of his designated successor Bob Chapek, the CEO wishes to assist in the search for his next successor. In a Wednesday blog post, Trian lambasted Disney for “poor succession planning.”

In an effort to minimize costs, Disney stated back in November that they would be prohibiting business trips that weren’t absolutely necessary and putting a hold on hiring for all but a select few roles. When Iger took over as CEO later that month, he did not lift the block on new hires.

The corporation has stated that Mr. Iger’s goal is to “adapt the business model for the altering media landscape,” aligning investment with income opportunity while bringing a renewed focus on the creative talent that has made The Walt Disney Company the envy of the industry.