Ike Perlmutter Funding Nelson Peltz’s Disney Battle
Once again, Nelson Peltz has used the Wall Street Journal as a platform to rail against Bob Iger and The Walt Disney Company.
And, once again, Peltz has phoned a friend. Yes, according to a bombshell report, Ike Perlmutter has joined the latest Disney fight.
Here’s what we just learned about a $2.5 billion war between billionaires and Disney.
What Just Happened?
The Wall Street Journal has published an article that explains an escalation in activist investor Nelson Peltz’s second public squabble with Disney.
As the article notes, Peltz hasn’t officially started a public proxy battle with Disney…yet. The billionaire reserves the right to do so in 2024, though.
Earlier in October, Peltz announced that he would push Disney CEO Bob Iger and the company’s Board of Directors for multiple seats.
Last year, Peltz demanded that Disney acknowledge his vast amount of shares by providing his business, Trian Investments, with a board seat.
Peltz and his friend, Isaac “Ike” Perlmutter,” felt strongly that Disney should stay out of politics. They also recognized former CEO Bob Chapek’s weakness.
Peltz cozied up to Chapek with promises of support in exchange for more control over Disney’s direction.
Chapek didn’t recognize the danger, but Disney’s Board most assuredly did.
After Bob Iger returned as Disney’s leader, he settled all family business by preventing Peltz from joining Disney’s Board.
Iger also recognized the hidden instigator in much of this and finally fired Perlmutter.
The brilliance of Iger’s maneuvering was that he ostensibly gave Peltz what he wanted by performing layoffs.
Then, Iger used said layoffs as an excuse to fire Peltz’s co-conspirator, Perlmutter.
The bold gambit paid dividends at the time. However, if you’re going to pull off a stunt like that, you must maintain the momentum.
Billionaires harbor grudges and hold long memories regarding those who have slighted them.
Iger ticked off two of the most powerful people in North America when he refused Peltz’s Disney Board seat request and then fired Perlmutter.
Now, the two individuals in question have returned, and they’re seeking revenge.
This sounds like a movie plot, but it’s the reality Disney faces today.
What Peltz Wants
When Peltz announced that he would once again demand a Board seat, he actually doubled down.
This time, the billionaire requests two seats. No, one of them isn’t for Perlmutter, though. Instead, Peltz wants a second seat for his son.
Should Disney acquiesce, which is extremely unlikely but not impossible, Peltz would control 15-18 percent of Disney’s Board votes.
The variance depends on whether Disney simply added two Board seats or eliminated two current Board members.
As a reminder, Peltz had previously called for Disney to replace Michael Froman with a Trian executive.
Disney remains unlikely to agree for the same reason Iger wanted nothing to do with Peltz at the start of the year.
Peltz holds no experience with theme parks, filmmaking, or streaming services, Disney’s upcoming focal points as a business. It’s not a good fit.
Still, Peltz holds the one thing that earns him a seat at the table. He’s currently controlling $2.5 billion in Disney stock.
According to the Wall Street Journal, that’s four times as much as Peltz held last year.
I don’t think the math is quite right there, as Trian claimed to control $800 million in Disney stock at the start of 2023.
So, I’d describe his holdings as a factor of three larger instead, but it’s an argument of semantics.
Peltz wants Disney to know that he controls 33 million shares of Disney stock, which makes me feel bad about my handful of shares.
Where did Peltz get so many more? That answer brings us back to…
Ike Perlmutter Enters the Fray
I feel like this section of the discussion boils down to, “Nobody fires Ike Perlmutter!!!”
Why is that the case? Well, Perlmutter has ceded voting control of his shares to his buddy, Nelson Peltz.
Presumably, Perlmutter is doing this because he feels Disney isn’t maximizing its value.
On this topic, he would have a point. Last year at this time, Perlmutter held a reported $2.5 billion in Disney stock.
Now, the combined holdings of Trian and Perlmutter account to…$2.5 billion.
What has changed? Disney stock value has dropped significantly.
In July 2022, Bob Chapek was playing defense because Disney stock hovered in the $100 range.
The stock climbed to $121 a year ago in August, but it closed at $91.80 on the Friday before Iger returned.
Disney stockholders wish the stock were at $91.80 today. It closed at $79.33 on October 27th, 2023.
Bob Iger’s big comeback triggered a spike in the price of Disney stock, but any number of 2023 struggles have crushed that optimism.
Wall Street views media companies, especially Disney, as facing an uphill climb with short-term profit margins.
Perlmutter is exhibit A on this front. According to Perlmutter, he has never gotten rid of any of his shares since he sold Marvel to Disney in 2009.
Instead, Perlmutter has occasionally acquired more shares, which means he would feel the impact of Disney stock more than anyone else.
As far as we know, he owns the most Disney shares of anyone on the planet, although that fact isn’t the most straightforward to track accurately.
Disney stock’s drop from $121 to $79 reflects a 35 percent shave in the value of his stock. He’s right to be annoyed, even if he is too rich to care.
Perlmutter Slams Disney
We should be honest that this isn’t the reason why Perlmutter is upset, though.
Bob Iger publicly and LOUDLY fired Ike Perlmutter. It was a media headline everywhere.
Now, Perlmutter is taking his revenge through this (also very public) demand for Disney Board seats.
Perlmutter comments on the record, which is fairly shocking for the notoriously publicity-shy individual.
The billionaire states, “While I was a Disney employee, I was not comfortable publicly stating my views on the company and its performance.”
Then, he adds, “As someone with a large economic interest in Disney’s success, I can no longer watch the business underachieve its great potential.”
Perlmutter claims that he will ask Disney’s Board to “immediately welcome one or more Trian Board candidates.”
I sincerely doubt that Disney moves from its stance earlier this year.
However, the stagnating stock price could cause investors to view the matter differently.
Peltz dropped his proxy battle before Disney’s Shareholder Meeting because he realized Iger’s popularity ensured that voters would side with Disney.
If Peltz pushed for a vote at the 2024 Disney Shareholder Meeting, more people are likely to side with him since Disney is struggling, even under Iger.
What Happens Next?
The war of words will likely escalate in the coming weeks, even though Disney refused to comment on the record to the Wall Street Journal.
Perlmutter deftly played up the notion that he holds noble aspirations in this battle. Here’s the applicable quote:
“Perlmutter aims to donate family wealth to further medical research and hospital care, and an increase in the value of his Disney holdings will allow him to do more of this, he said.
He and his wife Laurie have been active donors to medical charities and healthcare institutions including New York University’s Langone Medical Center.”
You can google stories about Perlmutter as a person if you’d like to form an unbiased opinion regarding his nobility.
What I’ll say is that claiming that he’s doing this to aid medical research is a clever approach. It distracts away from the perception of Peltz and Perlmutter as greedy billionaires.
The Wall Street Journal provided Perlmutter and Peltz with favorable coverage by adding that Disney executives hold $30 million in stock.
Iger sold most of his Disney stock after he retired, but he maintains $15 million. The other Disney executives hold less than $15 million combined.
The point of this coverage is to show that Disney executives appear to have substantially less skin in the game.
Also, the article notes that Perlmutter doesn’t want or expect a seat on Disney’s Board, which he and Peltz realize would be a non-starter.
Presuming that Disney follows the same playbook as last year, it’ll either ignore Peltz entirely until early 2024, or it’ll post an Investor Relations memo.
Said memo would explain once again why Trian’s criticisms are baseless. Here’s one of the slides from that argument:
I think we’d all be surprised if Bob Iger and Disney’s Board changed their tune now, but a lot depends on public sentiment, which we don’t know yet.
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