Apr 3, 2024

Disney Fights Off Billionaire's Attempt to Sweep Board of Directors

Disney announced this morning at its annual shareholders meeting that it had successfully defeated billionaire investor Nelson Peltz and his attempt to take multiple seats on The Walt Disney Company's Board of Directors, winning. [Disney CEO Bob Iger said, "I want to thank our shareholders for their trust and confidence in our Board of Directors and management team. It's growth and value creation for our shareholders and creative excellence for our consumers."

Disney has yet to submit final voting results to the SEC, but preliminary results show that shareholders overwhelmingly rejected the 81-year-old Peltz's vision, which questioned the reasons for using more women and blacks in Marvel movies.

According to The Hollywood Reporter,

one source said [Disney CEO] Iger secured 94% of the votes for the board seat. [Current board member Maria Elena Lagomasino outspent Peltz by about 2 to 1, with the activist Peltz securing about 30 percent of the vote. [Former Disney board member Jay Laszlo lost by a 5-1 margin.

Disney has more retail shareholders than any other publicly traded company, which is why the campaign was made public. According to one source, retail shareholders voted in favor of Disney's board by a margin of about 75 percent to 25 percent.

Peltz's Trian Fund Management conceded defeat in a statement:

While we are disappointed with the outcome of this proxy fight, Trian greatly appreciates the support and dialogue with Disney's stakeholders. We are proud of the impact we have had in bringing Disney back into the spotlight of value creation and good governance. Since our reengagement with Disney in late 2023, Disney has announced new business initiatives and capital improvement plans. The Board of Directors has been revamped with two new directors. Over the past six months, Disney's stock price has risen nearly 50%, making it the best performer on the Dow Jones Industrial Average 30 since the beginning of the year.

Peltz's Trian Fund Management launched a campaign in January, complaining on RestoreTheMagic.com that Trian sought to implement a succession plan for CEO Bob Iger, who is under contract through 2026. Peltz also wanted Disney to cut costs and avoid further bad decisions, such as overpaying for the 21st Century Fox acquisition. He also said that by 2027, Disney+ should achieve a Netflix-like profit margin of 15-20%, but that he believed adjustments would be necessary to achieve that goal. Peltz wanted two seats on the board, one for himself and the other for former Disney executive Jay Laslo. They wanted to replace current board members Maria Elena Lagomasino and Michael Froman.

Major Disney shareholders such as George Lucas and Loreen Powell Jobs, as well as JP Morgan Chase CEO Jamie Dimon, former Disney CEO Michael Eisner, and the grandchildren of founders Walt Disney and Roy O. Disney supported Iger's management in the dispute.

The company spent more than $40 million to defeat Peltz in the proxy fight, urging individual shareholders (who own about 40% of the company) to vote in favor of Iger's vision. One of the most memorable moments in Disney's board fight was this video produced by the company, in which Professor Ludwig von Drake and other animated characters cheered Disney's side.