Disney emerges victorious over activist investor Nelson Peltz in proxy battle

Table of contents

Disney emerges victorious over activist investor Nelson Peltz in proxy battle

Disney (SAY) successfully fended off activist investor Nelson Peltz in his quest to secure seats on the company’s board of directors, officially ends a hotly contested proxy battle that has plagued the entertainment giant and its CEO Bob Iger for months.

The company revealed the news at its annual shareholder meeting on Wednesday, confirming that Disney’s current board of directors will remain intact following a shareholder vote that gave Disney a victory “by a substantial margin.” About 75% of retail shareholders voted in favor of Disney’s current board, according to a source familiar with the matter.

Along with its loss to Peltz, who had fought for seats for himself and former CFO Jay Rasulo, Disney also defeated activist Blackwells Capital, which had urged shareholders to add its three candidates to the current board of directors.

Disney shares fell immediately following the results, down more than 1%.

The results represent a victory for Disney in the short term because they end months of uncertainty and distraction for Iger and the company’s management team. But it also means Disney’s board will face far greater pressure to deliver results as the company tries to navigate consumers abandoning traditional cable packages in favor of mostly unprofitable streaming services.

“Trian and Blackwells added urgency to the turnaround, but not substance,” Needham analyst Laura Martin wrote in a note to clients ahead of the earnings release. “DIS will remain under pressure to drive shareholder upside in the future.”

Disney had received support from high-profile proxy firm Glass Lewis, in addition to support from notable names like Jamie Dimon, CEO of JPMorgan; filmmaker and “Star Wars” creator George Lucas; the grandchildren of Walt Disney and his brother Roy; And Laurene Powell Jobswidow of former Apple CEO Steve Jobs and longtime investor in the company.

Disney emerges victorious over activist investor Nelson Peltz in proxy battle

Before the vote, Peltz secured the support of an influential proxy advisory firm. Institutional Shareholder Services (ISS) with notable shareholders like a fellow activist Again and investment company Yaktman Asset Management.

In a press releaseTrian revealed that two other institutional investors – the California Public Employees’ Retirement System (CalPERS), the nation’s largest public pension fund, and Neuberger Berman, a global asset manager – have expressed support for Peltz and Rasulo.

In addition, more than a dozen Current and former directors of the public company sent a letter to Disney’s board last week in support of Peltz and Trian.

How we got here

Peltz’s hedge fund, Trian Fund Management, which owns $3 billion in Disney common stock (including shares owned by former Marvel Entertainment president Ike Perlmutter) renewed efforts to shake up Disney’s board last year, as the stock price hit a multi-year low.

The activist was seeking to replace two existing board members – a former Mastercard executive. Michael Froman And WE family offices CEO Maria Elena Lagomasino – with him and Rasulo.

In its fight, Trian cited the loss of tens of billions in shareholder value, a decline in consensus earnings estimates for the next two years and disappointing studio content as some of the reasons for its board’s push.

Succession was also a key issue for Peltz supporters following the messy ouster of former CEO Bob Chapek in 2022.

Disney pushed back on many of Trian’s claims, saying it was done “significant progress” in the recovery of its activity. Some changes include the implementation of a ad-supported tier for its Disney+ streaming service in addition to price increases on its streaming services and theme parks and crackdown on password sharing.

The company argued that it was “actively engaged in high priority succession planning work.” Bob Iger’s contract is ready to expire end of 2026.

Investors reacted positively to the changes. Disney stock, up about 35% year to date, was the Dow’s best annual performer in the first quarter. Stocks are currently at record highs.

Alexandra Canal is a senior reporter at Yahoo Finance. Follow her on @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.

Click here for the latest stock news and in-depth analysis, including the events that move stocks.

Read the latest financial and business news from Yahoo Finance

Source Reference

Latest stories