Disney wins proxy fight against activist investor Nelson Peltz, as shareholders reelect full board

Disney
shareholders
on
Wednesday
reelected
the
media
conglomerate’s
full
board,
preliminary
results
show,
handing
a
stinging
defeat
to
activist
Nelson
Peltz
and
former
Marvel
CEO
Ike
Perlmutter,
both
of
whom

agitated
for
change
at
one
of
America’s
most
storied
companies.

The
widely
expected
victory
caps
a
combative
monthslong
process
and
affirms
the
board’s
decisions,
from
the
move
to
bring
back
CEO
Bob
Iger
to
his
efforts
to
reinvigorate
the
$223
billion
media
company.
Peltz-led
Trian
Partners
wanted
to
oust
two
directors,
Maria
Elena
Lagomasino
and
Michael
Froman,
citing
sustained
share
underperformance,

a
failed
succession
process,
and
billions
in
misdirected
investments.

Peltz
lost
to
Lagomasino
by
a
2-to-1
margin,
a
person
familiar
with
the
matter
said.
Retail
voters
overwhelmingly
supported
Disney,
that
person
added,
helping
to
deliver
Iger
94%
of
the
overall
vote.
Former
Disney
Chief
Financial
Officer
Jay
Rasulo,
whom
Trian
also
nominated,
lost
to
Lagomasino
by
an
even
larger
5-1
margin.
The
person
characterized
it
as
Peltz’s
largest
loss
ever.

Percentage-wise,
turnout
for
the
director
vote
was
in
the
mid-60s,
another
person
familiar
with
the
matter
said.
In
2023,
around
63%
of
Disney
shareholders
voted.

A
second
activist,
Blackwells,
also
failed
to
win
board
seats
in
its
own
long
shot
bid.

“I want
to
thank
our
shareholders
for
their
trust
and
confidence
in
our
Board
and
management.
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
release.

Disney
deployed
significant
resources
in
the
proxy
fight.
The
company
called
in
support
from
its
founding
family,
Star
Wars
creator
George
Lucas,
JP
Morgan
CEO
Jamie
Dimon
and
Laurene
Powell
Jobs,
the
widow
of
Pixar
and
Apple
CEO
Steve
Jobs.

While
Peltz
will
not
end
up
on
the
Disney
board,
he
and
his
firm
have
claimed
some
credit
for
the
rebound
in
the
company’s
shares.

“While
we
are
disappointed
with
the
outcome
of
this
proxy
contest,
Trian
greatly
appreciates
all
of
the
support
and
dialogue
we
have
had
with
Disney
stakeholders.
We
are
proud
of
the
impact
we
have
had
in
refocusing
this
Company
on
value
creation
and
good
governance,”
Trian
said
in
a
statement.

The
company
also
spent
an
estimated
$40
million
fighting
off
Peltz.
The
full-court
press
worked.
Disney’s
two
largest
shareholders,
Vanguard
and
BlackRock,
decided
to
back
management
in
the
final
days
before
Wednesday’s
meeting.

Ultimately,
the
activists
failed
to
convince
enough
retail
or
institutional
shareholders
that
he
had
a
meaningful
plan
to
fix
the
House
of
Mouse.
While
Peltz’s
candidacy
picked
up
meaningful
support
from
proxy
advisors
and
smaller
institutional
investors,
shareholders
were
less
compelled
by
Rasulo.

Though
its
choices
did
not
win
board
seats,
Blackwells
cheered
the
fact
that
Peltz
was
not
elected.

“Blackwells’
primary
objective
was
achieved
—
keeping
Nelson
Peltz
out
of
the
Disney
Boardroom,”
Blackwells
said
in
a
statement. “The
company
would
have
benefited
from
any
one
of
our
candidates
for
the
hard
work
needed
over
the
next
few
years
to
advance
this
iconic
company,
but
we
respect
the
will
of
the
shareholders
and
the
outcome.”

Peltz,
who
dislikes
being
called
an
activist
but
has
orchestrated
successful
campaigns
at
iconic
companies
like
PepsiCo,
P&G
and
Wendy’s,
controls
a
$3.98
billion
stake
in
Disney,
or
about
2%
of
total
shares
outstanding.
Most
of
those
shares
are
owned
by
Perlmutter.

With
Disney
shares
up
nearly
50%
since
Peltz’s
campaign
first
began,
Trian
and
Perlmutter
gained
a
lot
despite
their
board
defeat.
Peltz
is
partially
on
the
hook
for
an
estimated
$25
million
spent
on
the
fight,
a
small
amount
compared
to
the
paper
gains
in
the
stake
he
controls.

As
it
moves
past
the
battle
with
Peltz,
Disney
still
faces
unprecedented
challenges.
ESPN
has
shed
subscribers
for
years,
raising
questions
about
whether
it
is
prepared
to
go
toe-to-toe
with
streaming
upstarts.
Disney’s
streaming
business
has
spent
billions
to
win
subscribers
and
is
losing
money
as
it
tries
to
catch
market
leader
Netflix.

Perhaps
most
significantly,
the
company
is
searching
for
a
successor
to
Iger
for
the
second
time
in
five
years.
Disney’s
botched
succession,
where
Iger’s
hand-picked
replacement
Bob
Chapek
was
ousted
just
two
years
into
his
tenure,
was
a
key
point
Trian
used
against
the
company.

“Thank
you
for
your
trust
and
confidence
in
the
Disney
project
management,
and
the
ambitious
strategy
we’re
implementing
across
our
businesses
to
build
for
the
future,”
Iger
said
after
the
preliminary
vote
was
reported. “Now
that
this
distracting
proxy
contest
is
behind
us,
we’re
here
to
focus
100%
of
our
attention
on
our
most
important
priorities,
growth
and
value
creation
for
our
shareholders
and
creative
excellence
for
our
consumers.
Thank
you
again
for
your
support
and
for
your
continued
investment
in
this.”

There
is
evidence
that
major
proxy
advisors
agreed
with
Peltz’s
argument
that
the
board
was
ill-equipped
to
take
on
a
second
search
process.

Shareholder
advisory
firms
Glass
Lewis
and

ISS
both
noted
the
succession
issues
in
their
recommendations
to
investors.
Glass
Lewis
sided
with
Disney
and

asserted
Iger’s
return,
paired
with
this
year’s
nominations
of
Morgan
Stanley
executive
chairman
James
Gorman
and
former
Sky
CEO
Jeremy
Darroch
to
the
board,
have
given
the
company “adequate
opportunity
to
launch
a
more
credible
succession
program
and
develop,
communicate
and
execute
on
several
key
initiatives
which
appear
to
reasonably
target
acknowledged
operational
and
financial
weaknesses
at
Disney.”

Investors
rallied
around
Disney
in
February
after
the
company
made
a
series
of
major
announcements
durings
its
earnings
call,
including
that
it
had

obtained
the
exclusive
streaming
rights
to
Taylor
Swift’s
Eras
Tour
concert
film,

a
$1.5
billion
strategic
investment
in
Epic
Games
as
well
as

a
flagship
ESPN
streaming
service.

Peltz
called
the
slew
of
announcements
a “spaghetti-against-the-wall”
plan
that
was
meant
to “distract
shareholders.”

Shares
of
Disney
have
jumped
23%
since
Disney’s
fiscal
first-quarter
earnings
report
in
early
February.

Disclosure:
Sky
News
is
owned
by
Comcast,
CNBC’s
parent
company.