Disney CEO Bob Iger is navigating new turbulent waters as activist investor Nelson Peltz intensifies his challenge against the entertainment titan. Peltz’s Trian Partners, wielding a hefty $3 billion stake in Disney, announced a renewed proxy fight, aiming to sway shareholder opinion after Iger rebuffed Peltz’s bid for a seat on the board.
Trian Partners expressed frustration with Disney’s performance, citing a staggering $70 billion loss in shareholder value and a consistent underperformance compared to peers and the broader market. “Disney’s share price has lagged significantly over the last decade, and we believe change is crucial,” stated Trian.
Despite Disney’s stock gaining about 3.5% in 2023, it still trails the S&P 500’s robust 19% year-to-date climb. Currently valued at just under $170 billion, Disney sits behind streaming rival Netflix in market valuation.
In a move to enhance its board, Disney recently nominated Morgan Stanley CEO James Gorman and former Sky chief Jeremy Darroch. While Trian acknowledged this as a positive step, it remained firm in its stance that more fundamental changes are needed to reverse the “significant value destruction” overseen by the current board.
Peltz’s engagement with Disney dates back to February, when his first proxy battle came to a halt after Disney committed to significant cost reductions, including a workforce reduction of approximately 7,000 employees. Trian had initially sought at least three board seats, as per sources cited by Reuters.
Amid these corporate skirmishes, Disney is also grappling with questions about Iger’s succession, as his contract is set to expire in 2026. Iger’s return to Disney last year marked a dramatic shift following Bob Chapek’s exit.
In contrast to Trian’s aggressive stance, another shareholder, Blackwells Capital, has thrown its support behind Iger and the new board nominations. Jason Aintabi, CEO of Blackwells Capital, criticized Peltz’s approach, calling for the withdrawal of the “costly and disruptive” proxy battle. He emphasized that Disney’s board, under Iger’s leadership, is acting in the best interests of all shareholders and should be allowed to drive value without the distraction of what he termed a “fatuous sideshow.”
As Disney and Iger brace for the upcoming showdown with Peltz, the unfolding story echoes the complex dynamics of corporate governance and shareholder activism in today’s business landscape. The outcome of this battle could have far-reaching implications for one of America’s most iconic companies.