Shareholder Firm ISS Backs Nelson Peltz in Proxy Battle With Disney
In what is being described as a “major setback” for The Walt Disney Company, influential shareholder firm ISS is backing Nelson Peltz in his proxy battle with The Walt Disney Company.
In a new detailed report, ISS outlined Disney’s performance and evaluated the proposals of both Peltz’s Trian Management and activist investor Blackwells.
In the end, ISS noted that Disney has underperformed in recent years and placed a particular emphasis on Disney’s problems in finding a successor for Iger.
ISS Rejects Rasulo and Blackwells; Supports Peltz
While the firm continues to support Iger, they have recommended that shareholders vote for Peltz and withhold a vote for current Disney board member Maria Elena Lagomasino. They do not, however, recommend that shareholders vote for Peltz’s ally, Jay Rasulo.
After praising Peltz, ISS concluded that Disney needed a change on the board.
“Because the company has made positive changes to its board as well as operational changes that have been well received by the market, we recognize that some shareholders may feel that the company has sufficiently course corrected. These investors have likely drawn comfort from Iger’s return. Nonetheless, given the major missteps and severe consequences of the failed 2020 succession, particularly for a company that already had a history of succession drama, it may be difficult for others to simply trust that the board, albeit refreshed, will get it right this time,” ISS wrote in its report.
“These shareholders may be concerned about post-Iger DIS. Our analysis favors this latter view.”
In regards to Peltz’s candidacy, ISS stated that they believe the activist investor could help Disney with financial decisions.
“Dissident nominee Peltz, as a significant shareholder, could be additive to the succession process, providing assurance to other investors that the board is properly engaged this time around,” the report continued. “He could also help evaluate future capital allocation decisions. Moreover, multi-year concerns surrounding Lagomasino’s role as a compensation committee member strengthen the case that Peltz’s addition, on balance, would appear a net positive.”
Disney Responds
In response to the ISS report, Disney board chairman Mark Parker said that while he was “heartened” that ISS supported Michael Froman (who is the other board member being targeted by Trian) and rejected Rasulo and Blackwells, Disney “strongly believe that ISS reached the wrong conclusion in its recent report when it comes to adding Nelson Peltz to the board.”
“ISS fails to acknowledge the breadth of perspective and expertise Ms. Lagomasino adds to the Board,” Parker continues. “The strong recent performance and results overseen by the Disney Board demonstrate our focus on long-term shareholder value creation and succession planning and our commitment to good governance practices.”
Over the last couple of weeks, Iger has gotten public support from George Lucas, Jamie Dimon, and former president of Imagineering Bob Weis, ISS is one of the first major institutions to back Peltz.
The battle between Disney and Peltz will come to a head at The Walt Disney Company’s annual meeting on April 3.
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