In competing statements today, Trian Fund Management has taken a swing at Disney, Disney released a statement swinging back, and the stock price has remained flat. Here’s a look at where we currently stand, along with the statements from each of the parties.
Peltz Pushes…
Back in January 2023, activist investor Nelson Peltz launched a bid for a Board of Directors seat at Disney. Peltz, via Trian Fund Management, launched the “Restore the Magic” campaign, complaining about the state of Disney. At the time of his first effort, Trian said it owned about 9.4 million shares of The Walt Disney Company worth $900 million.
While Trian was complimentary of Disney’s “unrivaled global scale, irreplaceable brands, and opportunities to monetize its intellectual property”, they said that recent share price and performance was disappointing. At the time, Disney’s stock was around $95 per share. Trian noted that that the shares were trading at a nearly 8-year low despite the return of Bob Iger as CEO. Trian says they were not looking to replace Bob Iger at the helm, but simply place Peltz on the Board.
…Disney Defends
A few days later, the Disney Board of Directors defended Iger in a statement via an SEC filing.
The powerpoint-style filing led by stating “the current Disney Board is the right Board for shareholders”. The document began by making the argument that the current makeup of the Board is effectively ideal for Disney, and specific interest is given to the recently anointed Mark Parker as Board Chairman. Disney offered a strong rebuke of Peltz by saying, “Nelson Peltz does not understand Disney’s business and lacks the skills and experience to assist the board in delivering shareholder value in a rapidly shifting media ecosystem”. In separate filings with the SEC, Disney said that Peltz and Trian Partners offered no vision for the future of The Walt Disney Company.
The filing goes on to defend Bob Iger, notably in the purchase of 21st Century Fox assets and his returns to shareholders during his first tenure as CEO. The document quotes Peltz as saying investors should look at the total shareholder return, and Disney says that Iger’s was 554% during his previous stint as CEO.
Disney closed with a series of slides that concluded that “Peltz has no track record in large-cap media or tech” and said that he has “no solutions” to offer Disney at this time.
Peltz Withdraws
In the second week of February, Nelson Peltz said that he was ending his proxy fight with Disney after Disney CEO Bob Iger announced that Disney would be reducing its workforce by 7,000 jobs and that it would seek to save roughly $5.5 billion in cost savings.
In response to Peltz withdrawing his proxy fight, Disney issued a statement saying:
We respect and value the input of all our shareholders and we appreciate the decision by Trian Fund announced by Nelson Peltz this morning.
This is a moment of great opportunity for The Walt Disney Company, as we recommit to our historic 100-year legacy of unrivaled creativity and a future of sustained growth and profitability. We are pleased that our Board and management can remain focused without the distraction of a proxy contest, and we have tremendous faith in Bob Iger’s leadership and the transformative vision for Disney’s future he set forth yesterday.
We will continue to engage with all our shareholders, and we look forward to our upcoming annual meeting on April 3, 2023. All shareholders of record as of the close of business February 8, 2023 are entitled to vote at the meeting.
Peltz Returns from Summer Hibernation
Back in October, there was a report that Peltz was making a fresh push for a Disney Board seat after Trian increased its stake to $2.5 billion from the $900 million back in January. Today, Trian made the new push for a seat official, noting that its current stake in The Walt Disney Company is worth about $3 billion and that Disney has lost billions of dollars worth of value since their original push earlier this year. Trian said that it has had conversations with Iger and while Iger offered a chance for Trian to meet with the Board, Disney would be turning down a request for Board representation. Here’s today’s statement:
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. Disney’s share price has underperformed proxy peers and the broader market over every relevant period during the last decade and over the tenure of each incumbent director. Investor confidence is low, key strategic questions loom, and even Disney’s CEO is acknowledging that the Company’s challenges are greater than previously believed. While James Gorman and Sir Jeremy Darroch represent an improvement from the status quo, the addition of these directors 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. Trian intends to take our case for change directly to shareholders.
Disney Fires Back
Disney released a statement following the statement from Trian, noting that a former executive, Isaac Perlmutter, owns about 78% of the shares that Trian is using to throw its weight around. Disney noted that Perlmutter was fired earlier this year, and holds a longstanding personal agenda against Iger. Here’s Disney’s statement:
The Walt Disney Company has a proven track record of delivering long-term value to our shareholders and is in the midst of a significant transformation to reinforce our position as the world’s preeminent entertainment company. Over the past twelve months, we restructured the company to restore creativity to the center of all our businesses as we significantly reduce costs and drive efficiencies, and we are on track to achieve about $7.5 billion in cost savings – $2 billion more than our original target.
Disney is moving from a period of fixing to a new era of building, as the entire media sector navigates the crosscurrents of the competitive landscape for streaming. We are executing on four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business; building ESPN into the preeminent digital sports platform; improving the output and economics of our film studios; and turbocharging growth in our Experiences business. Our extraordinary portfolio of businesses, brands and assets—and the key synergies between them—are the foundation to developing the popular franchises that will continue to drive our strategic success. With one of the strongest balance sheets in the media sector, Disney expects free cash flow to approach pre-COVID levels in fiscal 2024, and the Board and management are steadfast in our commitment to ensuring The Walt Disney Company’s long-term success for the benefit of all our shareholders.
Disney also continues to refresh its Board of Directors, including the appointments of James P. Gorman, Chairman and Chief Executive Officer of Morgan Stanley, and Sir Jeremy Darroch, a veteran media executive and former Group Chief Executive of Sky, as new directors, as the result of a lengthy and comprehensive search that began in April of this year. Their appointments reflect Disney’s commitment to a strong board focused on the long-term performance of the company, strategic growth initiatives, the succession planning process, and increasing shareholder value. As also announced yesterday, Disney board member Francis A. deSouza has decided not to stand for reelection at the annual meeting.
Mr. Peltz, in partnership with Isaac Perlmutter, a former Disney executive, intends to take its case to shareholders. Mr. Perlmutter owns 78% of the shares that Mr. Peltz claims beneficial ownership of, or more than 25 million of the 33 million shares. This dynamic is relevant to assessing Mr. Peltz and any other nominees he may put forth as directors, as Mr. Perlmutter was terminated from his employment by Disney earlier this year and has voiced his longstanding personal agenda against Disney’s CEO, Robert A. Iger, which may be different than that of all other shareholders.
The Disney Board will recommend to shareholders its slate of director nominees in the company’s proxy statement to be filed with the Securities and Exchange Commission and distributed to all shareholders eligible to vote at the annual meeting.
Disney shareholders are not required to take any action at this time.
As always, keep checking back with us here at BlogMickey.com as we continue to bring you the latest news, photos, and info from around the Disney Parks!
Disney is in good hands. Nice work, Bobby!! 🙄