Bob Iger Immediately Outflanks Nelson Peltz Again
Those who don’t learn from history are doomed to repeat it.
That’s how the saying goes, and Disney is living it, as activist investor Nelson Peltz has returned to stir up more trouble.
This time, Disney CEO Bob Iger seemed ready for him and has already surprised his billionaire opponent.
Yes, during the past 72 hours, Bob Iger has immediately outflanked Nelson Peltz again. Here’s how.
Déjà vu All Over Again
Here’s a relatively recent New York Times article. I’ve taken out the names for the moment to add a bit of mystery.
“(Corporation) has finally parted ways with an (unnamed activist investor) who once tried to break up the company.”
Now, those of you who have kept up with the drama in 2023 would immediately fill in the blanks with Disney and Nelson Peltz.
After all, that statement would describe what happened earlier this year.
Peltz made Bob Iger’s return a miserable experience before the accomplished executive eventually turned the tables.
Now, Peltz has returned and leaned into the idea that he and his financial benefactor, Isaac Perlmutter, will push around Iger and Disney.
Peltz has demanded two seats on Disney’s Board of Directors this time, which is double what he wanted earlier in 2023.
However, the quote I just referenced didn’t come from this year. Instead, it’s the start of a 2016 piece. Here, I’ll add the rest.
“PepsiCo has finally parted ways with (Nelson Peltz), who once tried to break up the company.”
Why does that bit of recent corporate aggravation matter today?
Well, PepsiCo’s Chief Financial Officer (CFO) at the time was Hugh Johnston, who had held that role since 2010.
Does that name sound familiar to you? It should if you’ve been reading MickeyBlog this week, as Disney just named Johnston its new CFO.
A decade ago, Johnston became a hero among PepiCo investors when he turned away Peltz.
At the time, the billionaire wanted to split PepsiCo into parts. Johnston interceded and eventually maneuvered Peltz out of the picture.
Gee, I wonder why Bob Iger just hired Johnston as Disney CFO…
Iger Chooses His Fighter
Nearly a decade ago, Peltz’s Trian Fund Management sent an angry 37-page letter to PepsiCo.
In this missive, Peltz’s group demanded changes to address his perceived lack of respect for the current PepsiCo business model at the time.
Do you know what Peltz expected PepsiCo to do? The activist investor expected PepsiCo to spin off Pepsi!
That would be like Disney spinning off Mickey Mouse!
Still, a lot of this will sound familiar to Disney fans who are paying attention to the current story.
Peltz’s fund held $1.2 billion in PepsiCo stock at the time.
Currently, Trian manages $2.5 billion in Disney stock, although much of that comes from Perlmutter.
To the best of anyone’s knowledge, Perlmutter owns more Disney stock than any other investor.
So, his throwing his weight behind Peltz has created a kind of double whammy for Disney.
When two parties claim $2.5 billion in stock holdings, you sort of have to pay attention to them when they’re disgruntled.
The problem is that Peltz isn’t exactly revered for his market instincts.
I realize that statement may surprise you about a billionaire investor, but that’s not my opinion.
Instead, Jeffrey Sonnenfeld, the CEO of the Chief Executive Leadership Institute at the Yale School of Management, performed some research.
The respected academian and a cohort, CELI Research Director Steven Tian, researched several of Peltz’s initiatives.
The two businesspeople determined that “more than half of the companies (Peltz) and his firm targeted underperformed the S&P 500, in both share price and total shareholder returns, while he was on their boards.”
Sonnenfeld concluded the findings by stating, “Where’s the track record to say that he adds value. He adds distraction like a dripping faucet.”
Iger Outflanks Peltz
So, Iger anticipated the return of Peltz as Disney stock stagnated.
When the moment arrived, Iger selected Johnston, someone who has experience thwarting Peltz’s power grabs.
This seems like a good time to mention that PepsiCo never spun off its soft drinks division.
On a seemingly unrelated note, PepsiCo’s revenue has increased 38 percent annually since Peltz gave up.
When Johnston worked as CFO at PepsiCo, he researched Peltz’s claims, ultimately rejecting the idea.
Later, Johnston performed so admirably that Peltz just gave up and sold his PepsiCo stock.
Later – and this isn’t a joke – he started agitating with Wendy’s instead.
The problem with letting people like Nelson Peltz in the door is that they’re never satisfied and won’t stop asking for more.
If Disney capitulated to Peltz today, he’d ask for something else later, which brings us to what really matters here.
No matter what Peltz says, he doesn’t really care what Disney’s stock price is.
That’s his built-in gambler’s insurance. Should Disney boost its price without giving him Board seats, Peltz will still earn a lot of money.
What the billionaire and his buddy, Perlmutter, really want is a seat at the table for when Disney chooses its next CEO.
That person will carry enormous influence over society.
Iger believes that Peltz and Perlmutter shouldn’t play a factor in the choice of Disney’s successor.
So, Iger went out and got a CFO who has already proven that he can beat back Peltz and force the activist investor to go away.
Folks, Bob Iger is really smart.
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