Disney Responds To Nelson Peltz’s Latest Bid For a Board Seat
Bob Iger and The Walt Disney Company are preparing for another proxy battle with Nelson Peltz.
Peltz and his Trian Management firm have long sought a seat on the Disney board. In January, the activist investor launched the “Restore the Magic” campaign in a bid to get a seat on the Disney board.
The longtime thorn in Bob Iger’s side publicly attacked Disney’s sinking stock prices and lack of dividends in an effort to get elected to the board.
After Iger outmaneuvered Peltz with his company reorganization and plan to cut nearly $5.5 billion in spending, Trian ended its Restore the Magic Campaign, and Peltz admitted defeat. Still, the activist investor warned that the was not going away.
“We wish the very best to Bob [Iger], this management team, and the board. We will be watching. And we will be rooting.”
Nelson Peltz Returns
As Disney’s stock continued to slide over the summer, and Bob Iger found himself in hot water for his comments on the pending SAG-AFTRA strike, Peltz began to gear up for another proxy battle.
Joining forces with former President of Marvel (and longtime Bob Iger) critic Ike Perlmutter, Trian Management accumulated more than $2.6 billion in Disney stock.
While it seemed as if Disney’s strong Q4 earnings and the subsequent rise in stock price would be enough to fend Peltz off, the activist investor announced that he was seeking two seats on the Disney board.
Disney Releases a Statement
In response to Peltz’s latest maneuvering, Disney released a statement highlighting the company’s progress and the new allies it has acquired.
“The Walt Disney Company has a proven track record of delivering long-term value to our shareholders and is in the midst of a significant transformation to reinforce our position as the world’s preeminent entertainment company. Over the past twelve months, we restructured the company to restore creativity to the center of all our businesses as we significantly reduce costs and drive efficiencies, and we are on track to achieve about $7.5 billion in cost savings – $2 billion more than our original target.”
Moving to a New Era
In response to Peltz’s latest threat, Disney trumpeted that they were “moving from a period of fixing to a new era of building”.
“We are executing on four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business; building ESPN into the preeminent digital sports platform; improving the output and economics of our film studios; and turbocharging growth in our Experiences business. Our extraordinary portfolio of businesses, brands and assets—and the key synergies between them—are the foundation to developing the popular franchises that will continue to drive our strategic success,” they wrote.
“With one of the strongest balance sheets in the media sector, Disney expects free cash flow to approach pre-COVID levels in fiscal 2024, and the Board and management are steadfast in our commitment to ensuring The Walt Disney Company’s long-term success for the benefit of all our shareholders.”
Disney Fortifies the Board
The statement also highlighted new board members James P. Gorman, the CEO Of Morgan Stanley, and Sir Jeremey Darroch, who previously led Sky News.
Finally, Disney is drawing attention to the role that former Ike Perlmutter is playing in Peltz’s latest gambit.
“Mr. Peltz, in partnership with Isaac Perlmutter, a former Disney executive, intends to take its case to shareholders. Mr. Perlmutter owns 78% of the shares that Mr. Peltz claims beneficial ownership of, or more than 25 million of the 33 million shares. This dynamic is relevant to assessing Mr. Peltz and any other nominees he may put forth as directors, as Mr. Perlmutter was terminated from his employment by Disney earlier this year and has voiced his longstanding personal agenda against Disney’s CEO, Robert A. Iger, which may be different than that of all other shareholders.”
A Looming Battle
While Peltz has more ammunition than he did during his first bid for a Disney board seat, Iger and Disney are in a much better position overall.
If Iger can fend off Peltz’s latest bid, he may be able to vanquish Trian and Perlmutter once and for all.