Activist Shareholder Nelson Peltz Fights Back Against Disney’s Board, Urges Shareholders to Vote for Change
In a bold move, activist shareholder Nelson Peltz is taking on Disney’s board of directors, urging shareholders to vote for change. Peltz, the CEO of Trian Fund Management, has accused Disney’s current board of having “self-inflicted wounds” that have negatively impacted the company’s bottom line. Peltz and his hedge fund, which owns $3 billion of Disney common stock, believe that they can improve the company’s performance and are pushing for a spot on Disney’s board of directors.
Peltz expressed his disappointment in Disney’s lack of engagement with its largest active shareholder. He stated, “It is unfortunate that a company as iconic as Disney and with so many challenges and opportunities has refused to seriously engage with us…about board representation.” Peltz believes that Disney needs directors with an “ownership mentality” who can bring fresh perspectives to address the company’s challenges.
The letter filed with the Securities and Exchange Commission (SEC) by Peltz highlights Disney’s underperformance compared to its peers and the broader market. The document states that Disney’s total shareholder return has lagged behind the S&P 500 by 34% over the past year and 168% over the past 10 years. In comparison to its peer companies in the entertainment industry, Disney’s returns have lagged by 48% over the last year and 401% over a 10-year period.
One of the main criticisms from Peltz and his hedge fund is Disney’s failure to adequately plan for CEO succession. Current CEO Bob Iger returned to the role after Bob Chapek’s tenure, raising concerns about the company’s long-term leadership strategy. Peltz argues that the board has misaligned management incentives and failed to drive a strategy to make Disney’s streaming business profitable or produce good content.
Disney, on the other hand, is pushing back against Peltz’s efforts. The company argues that it is in the midst of an “unprecedented transformation” and is already making management changes and streamlining operations to become more cost-efficient. Disney claims that Peltz has not presented any strategic ideas for the company and lacks relevant media and technology experience. Additionally, Disney questions the qualifications of Peltz’s nominee, Jay Rasulo, who has not held an executive position at a publicly-traded company since leaving Disney in 2015.
Peltz and his hedge fund counter these arguments by highlighting their significant consumer brand expertise, financial acumen, and shareholder-first mindset. They believe that Disney’s financial underperformance is a result of a board that has failed to fulfill its responsibilities as stewards of shareholder capital.
The battle between Nelson Peltz and Disney’s board of directors is heating up, with both sides presenting their arguments to shareholders. It remains to be seen whether shareholders will support Peltz’s call for change or side with Disney’s current board. As the vote approaches, all eyes will be on Disney to see if they can address the concerns raised by their largest active shareholder and restore the magic that has made them an iconic entertainment giant.