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Nelson Peltz vs Disney: The stage is set for a blockbuster proxy battle

Updated: Mar 7

Nelson Peltz, the famed activist investor, has taken his attempt for a board seat at Disney to the shareholders after Disney denied his nomination. Trian Partners, the firm headed by Peltz, owns $900 million in Disney stock and filed a preliminary proxy statement urging shareholders to support his nomination. In a 35 page report released by Trian, a number of the current leadership’s mistakes are outlined. In particular it highlights their ‘poor judgment’ with regards to M&A strategy, picking out the 2018 acquisition of 21st century Fox as an example. Additionally the report criticizes Disney’s ‘over-the-top’ compensation packages and lack of cost discipline specifically in the streaming business which has lost $11 billion to date.

Disney stock is trading near an 8 year low, and their recent rehiring of former CEO Bob Iger, who became a media darling during his tenure from 2005 to 2020, further reflected the board's inability to create a succession plan. This move puts one of America’s most notorious activist investors against a highly revered CEO in the media. Peltz has battled with numerous large corporations before, finding his way into the boards of corporate powerhouses such as P&G and Mondelez. Peltz and Trian have been very clear about their intentions with this move. They are not seeking to break up the company or remove Bob Iger but rather enhance shareholder value by de-leveraging the company and restoring dividend payments by 2025. They have launched a website called ‘Restore the Magic’ to put out their message.

In the wake of this move Disney have announced that Mark Parker, executive chair at Nike will take over as chairman from Susan Arnold at the next annual meeting. Arnold, the first woman to chair the entertainment group, had a tough tenure since her appointment as chair in 2021 facing the impacts of Covid on the company’s business and scrutiny for renewing Chapek’s contract as CEO, after the Iger replacement's infamous confrontation with Florida’s governor.

Although Disney have said that they are open to ‘constructive engagement’ with Peltz it seems unlikely that the activist will stop until he sees major steps being taken towards unlocking shareholder value.

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