Company boards typically choose to remain anonymous. Nelson Peltz, an activist investor, might be determined to prevent Disney directors from enjoying such luxury.
MAIN POINTS
- Sources say that Nelson Peltz is holding off on making a decision until after Disney’s quarterly results announcement on Wednesday.
- New board members may be nominated by shareholders between December 5 and January 4.
- Should Trian pursue a proxy battle, it is expected to criticize Disney’s share underperformance and deficiency in responsibility when selecting Bob Iger’s replacement.
According to people familiar with the situation, Peltz’s Trian Fund Management, which is in charge of roughly $2.5 billion worth of it’s shares, will be closely monitoring Disney’s fiscal fourth-quarter earnings report following the bell on Wednesday. The bulk of the shares that Trian is in control of are owned by Ike Perlmutter, a former Marvel Entertainment executive and a close associate of Peltz who has previously had disagreements with it’s CEO, Bob Iger.
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Since ending its most recent active campaign against it in January, Trian has refrained from making any public announcements. The persons, who wished to remain anonymous due to the confidential nature of the talks, claimed that the fund has deliberately waited until Disney releases its earnings before determining whether to proceed with a proxy struggle to nominate new board members. Trian opted not to respond.
It’s unclear what it can or will say to pressure Peltz to back down during Wednesday’s earnings conference call. It has slashed 7,000 positions so far this year, but Trian could want to see proof that the cuts to content spending and employment losses are increasing income. Earlier this week, it announced Hugh Johnston, a former PepsiCo executive, as its new chief financial officer. It opted not to respond.
Peltz would prefer to join the board without having to go through the expensive and time-consuming nomination procedure. He attempted to join the it’s board earlier this year, but Iger rejected him, and in February he finally left. According to a it filing, shareholders must propose directors between December 5 and January 4 for voting at Disney’s annual meeting.
This also applies to a number of other media businesses. In an effort to spur growth, the legacy media sector, which is made up of businesses like Paramount Global, Comcast’s NBCUniversal, Warner Bros. Discovery, AMC Networks, and Lions Gate Entertainment, has suffered billion-dollar losses from streaming video and tens of millions of cancellations of cable TV in recent years. Should Peltz proceed with a slate of nominations, Trian is expected to target Disney’s declining stock price. It’s shares are almost at a 10-year low. Except for Iger, every board member has served as chairman during a period of declining shareholder returns.
People familiar with Peltz’s thinking say that Trian chose to target Disney because he believes the firm has a best-in-class brand and because the shares don’t have a dominant owner. Peltz successfully lobbied in 2017 to be appointed to the Proctor & Gamble board, citing the power of the company’s brand.
The board has also had difficulty developing a replacement for Iger, who has extended his contract to be CEO five times. Iger did indeed depart Disney in 2022 after resigning as executive chairman, but he came back as CEO 11 months later after the board dismissed Bob Chapek, his choice for the position.
In July, Iger extended his contract with Disney once more, this time until 2026. Peltz might contend that Trian can instill accountability in a board that has allowed Iger to remain in the position for as long as he pleases. According to a September report, Iger has a close relationship with a number of board members, including General Motors CEO Mary Barra and Nike Executive Chairman (and Disney Chairman) Mark Parker.
However, Trian might have to advocate for particular concepts or financial tricks that Disney hasn’t yet explained in order to persuade Disney shareholders to support Peltz or other board members. Iger has stated that he is open to considering strategic investment partners for ESPN and that he will look at selling ABC and other linear networks. Peltz might be watching the Disney management conference call to see whether any progress has been made on either of these fronts. If not, he might engage in a battle in public to gain admission to it’s board for himself and other people.
Frequently asked questions
How much of Disney does Peltz own?
People familiar with the case report that Trian Fund Management, Peltz’s activist group, has grown its Disney investment to approximately 30 million shares, valued at approximately $2.5 billion. With this investment, Trian ranks among it’s biggest shareholders.
Why does Peltz want Disney?
According to the source, Peltz thinks it’s stock is undervalued and wants to see greater diversity on the board.
Who owns most of Disney World?
Top 10 Owners of Walt Disney Co
| Stockholder | Stake | Shares owned | Total value ($) | Shares bought / sold | Total change |
|---|---|---|---|---|---|
| The Vanguard Group, Inc. | 7.74% | 141,440,236 | 11,463,731,128 | +880,334 | +0.63% |
| BlackRock Fund Advisors | 4.16% | 75,983,045 | 6,158,425,797 | +219,313 | +0.29% |
| SSgA Funds Management, Inc. | 4.00% | 73,142,473 | 5,928,197,437 | +2,482,492 | +3.51% |
| State Farm Investment Management … | 1.85% | 33,783,812 | 2,738,177,963 | -212,780 | -0.63% |
| Geode Capital Management LLC | 1.82% | 33,246,496 | 2,694,628,501 | +751,034 | +2.31% |
| Northern Trust Investments, Inc.(… | 1.12% | 20,464,081 | 1,658,613,765 | -852,923 | -4.00% |
| Norges Bank Investment Management | 0.90% | 16,494,876 | 1,336,909,700 | +934,136 | +6.00% |
| T. Rowe Price Associates, Inc. (I… | 0.87% | 15,837,794 | 1,283,653,204 | -7,709,432 | -32.74% |
| Morgan Stanley Smith Barney LLC (… | 0.87% | 15,832,789 | 1,283,247,548 | -98,706 | -0.62% |
| BlackRock Investment Management (… | 0.80% | 14,570,157 | 1,180,911,225 | -172,384 | -1.17% |
What is Nelson Peltz known for?
Billionaire and well-known activist investor Nelson Peltz. He started Trian Fund Management with Peter May and Edward Garden.
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