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Disney’s Succession Struggles: Investors Grapple with Board’s Past in Proxy Fight
Edited by: TJVNews.com
As the proxy fight between Chief Executive Bob Iger and activist investor Nelson Peltz unfolds, investors are not just scrutinizing Disney’s future prospects but also reflecting on its tumultuous past, according to a recently published report in The Wall Street Journal. The decision-making of Disney’s board, particularly regarding succession planning, has emerged as a focal point for investors grappling with the company’s leadership transition.
With Disney’s April 3 meeting looming, investors are deliberating whether the board is capable of selecting a strong successor to Bob Iger, whose tenure has been marked by significant highs and lows, as was reported by the WSJ. Critics have pointed to the board’s role in the selection and subsequent ousting of Bob Chapek in 2020, followed by the extension of Iger’s contract upon his return, as indicative of governance challenges.
Neuberger Berman, a long-time investor in Disney, has thrown its support behind Peltz’s hedge fund, Trian Partners, advocating for board seats for Peltz and former Disney CFO Jay Rasulo, the WSJ report indicated. Joseph Amato, Neuberger Berman’s chief investment officer, emphasized the importance of independent oversight in light of the board’s past missteps in succession planning.
“We don’t think it would create undue harm for shareholders to have another couple of independent eyes and ears,” Amato stated in an interview, according to the WSJ, highlighting the need for greater accountability and transparency in Disney’s governance structure. Neuberger Berman, managing assets worth $463 billion, holds approximately 0.1% of Disney shares, valued at $254 million.
In response to investor concerns, Disney emphasized its commitment to a diligent and thorough succession planning process, asserting that the board and succession-planning committee are actively engaged in identifying a new CEO and assembling a strong leadership team, as was explained in the information provided in the WSJ report. Naming a successor with the capability to navigate Disney’s complex landscape is identified as a top priority for the company.
The New York City Retirement Systems, holding a substantial $290.75 million in Disney stock, signaled its intention to back the company’s nominees, citing the management’s strategic focus and positive stock performance, the WSJ report said. Comptroller Brad Lander emphasized the importance of allowing Disney’s leadership time to execute their transformation plans, urging shareholders to support the incumbent board.
Institutional investors aligning with Disney’s slate underscored Bob Iger’s track record of steering the company through challenges and his commitment to course correction. They argue that the executive talent and strategic vision going forward outweigh concerns about board composition, suggesting that Peltz’s involvement may not be necessary for Disney’s success.
Disney has garnered support from prominent figures in the business and entertainment world, including “Star Wars” creator George Lucas, Laurene Powell Jobs, former CEO Michael Eisner, JPMorgan Chase CEO Jamie Dimon, and descendants of the Disney family, as per in the information in the WSJ report. Their public endorsements bolster Disney’s position and lend credibility to the current leadership’s vision.
Despite these endorsements, the proxy battle remains fluid, with potential outcomes ranging from a negotiated settlement to a contentious showdown at the shareholder meeting. As mentioned in the WSJ report, the final verdict hinges on the votes of major institutional shareholders like BlackRock and Vanguard, who have yet to cast their ballots and often wait until closer to the deadline to do so.
Individual investors, wielding significant influence with over one-third of shares, are expected to play a decisive role in shaping the outcome of the proxy vote, the report added. Their collective voice will echo loud in determining Disney’s future trajectory and the direction of its leadership.
With only a minority of votes cast so far, the battle for board seats remains tightly contested, reflecting the divergent views among shareholders.
According to insiders familiar with the matter, just over 22% of shares have been cast as of Tuesday, primarily by individual and smaller investors. The report in the WSJ said that in this early tally, activist investor Nelson Peltz appears to hold a lead over Disney director Maria Elena Lagomasino. However, Jay Rasulo, the other nominee on Trian’s slate, has yet to garner significant support from shareholders.
A Disney spokesman condemned the leaking of early vote counts as “a highly inappropriate attempt to sway votes,” highlighting the sensitivity surrounding the proxy battle, according to the WSJ report. Shareholders retain the ability to cast or alter their votes until the polls officially close on the day of the annual meeting, adding an element of uncertainty to the outcome.
Against this backdrop, Disney and Trian intensify their efforts to rally support among shareholders, crisscrossing the United States to make their final pitches. Bob Iger, Disney’s outgoing CEO, personally engages with major shareholders, underscoring the significance of the proxy battle for the company’s leadership transition. Indicated in the WSJ report was that senior executives, including finance chief Hugh Johnston and Alexia Quadrani, executive vice president of investor relations, also joined the campaign trail, seeking to sway investor sentiment in Disney’s favor.
Notably, Disney board members, including Chairman Mark Parker and Maria Elena Lagomasino, whose seat is contested by Trian, actively participate in shareholder meetings, lending their support to the incumbent leadership, the WSJ added. These concerted efforts reflect the high stakes involved in the proxy battle and the determination of both sides to secure victory.
