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Billionaire Nelson Peltz Continues Proxy War Against Disney After Board Seat Bid Rejected
Edited by: TJVNews.com
Billionaire activist investor Nelson Peltz is intensifying his proxy war against Disney after the media giant rejected his bid for multiple board seats, according to a recent report in the New York Post. Peltz, the CEO of Trian Fund Management, which holds $3 billion worth of Disney stock, aims to secure at least three board seats, including one for himself, the report added.
Despite an offer from Disney CEO Bob Iger for Trian to engage in discussions with the board, the company ruled out granting the activist shareholder’s request for seats, as was reported by the Post. The rejection comes as Disney appointed two new directors: James Gorman, outgoing CEO of Morgan Stanley, and Jeremy Darroch, former executive at Sky.
In response to the appointments, Trian acknowledged the changes but stated that they “will not, in our view, restore investor confidence or address the root cause behind the significant value destruction and missteps that this board has overseen,” the report in the Post said.
The denial of Peltz’s request for a board seat may be linked to his association with former Disney executive Isaac “Ike” Perlmutter, who was ousted as Marvel CEO in 2015, as was indicated in the Post report. Perlmutter, a longtime friend of Peltz, handed over more than 30 million Disney shares to him last month. The Post report also said that Disney highlighted that Perlmutter, terminated from Disney earlier in the year, owns 78% of the shares claimed by Peltz and has a personal agenda against Disney’s CEO.
In response to the rejection, Trian declared its intention to take the case for change directly to shareholders. The Post reported that the fund is signaling a second proxy fight and plans to nominate director candidates when the nomination window opens early next month.
Amid challenges faced by Disney, including low investor confidence and strategic uncertainties, Trian emphasized the need for change. According to the Post report, Disney shares, trading near nine-year lows, remained flat at around $92, with the company’s market capitalization at $169 billion.
As Peltz continues his push for influence, the proxy battle underscores the tensions between activist investors and major corporations grappling with strategic decisions and leadership changes.
Trian, one of the industry’s oldest and most respected corporate nudges, has closely monitored Disney since CEO Bob Iger’s return from retirement a year ago.
Earlier this year, Peltz postponed a board challenge to give Iger time to “right the ship.” However, Trian stated in its Thursday press release, “Since we gave Disney the opportunity to prove it could ‘right the ship’ last February, up to our re-engagement weeks ago, shareholders lost ~$70 billion of value,” the Post reported.
Representatives for Trian declined to comment beyond the press release. The fund, co-founded by Peltz in 2005, believes Disney shares are significantly undervalued and has been urging Iger to reverse the company’s stock decline, as was reported by the Post. Iger announced on Wednesday his plans to step aside after his contract expires next year.
Peltz, also a board member at Wendy’s and Procter & Gamble, expressed dissatisfaction with Disney’s decision to bring Iger out of retirement and reinstate him as CEO, the Post report said. In January, when Disney initially rejected Peltz’s board request, it claimed he “does not understand Disney’s business.”
Iger has implemented measures to boost Disney’s profits, such as raising ticket prices at its theme parks by up to 10%. The report added that in the past 12 months, Disney underwent a significant restructuring, aiming for about $7.5 billion in cost savings – $2 billion more than the original target.
Iger outlined four areas of focus for the company, including making its streaming business profitable, building ESPN into a digital sports brand, improving film studios’ performance, and investing $60 billion over the next decade to “turbocharge” growth at its theme parks, the report in the Post indicated. As Trian persists in its efforts to influence Disney’s direction, the proxy battle highlights the challenges faced by major corporations grappling with strategic decisions and leadership changes.
Yearly passes at Disney World in Orlando, Florida, saw a 10% price hike, with the most expensive Incredi-Pass now at $1,449. At Disneyland in Anaheim, California, single-day tickets increased 8.9% to $194, the Post reported.
Disney also adjusted its pricing strategy for its Disney+ streaming service, raising the monthly cost of ad-free Disney+ by $3, approximately a 27% increase to almost $14, the Post report said. The cost of ad-free Hulu will similarly rise by $3 to nearly $18, a 20% hike that surpasses the most popular ad-free tier at Netflix.
Iger acknowledged the price hikes, emphasizing their intent to encourage consumers to opt for cheaper ad-supported versions of these services, according to the Post report. As Trian persists in its efforts to influence Disney’s direction, the media giant faces challenges in balancing profitability with consumer satisfaction amid evolving market dynamics.
