Trian Partners has officially filed documents with the SEC in their proxy battle for two Board of Directors seats at The Walt Disney Company. Train Partners has nominated Nelson Peltz and former Disney CFO Jay Rasulo. Here’s the announcement from Trian:
Trian Fund Management, which beneficially owns $3 billion of common stock in The Walt Disney Company, today filed a preliminary proxy statement with the Securities and Exchange Commission (SEC) in connection with its nomination of Nelson Peltz and James A. (“Jay”) Rasulo for election to the Disney Board of Directors at the Company’s 2024 Annual Meeting of Shareholders.
“It is unfortunate that a company as iconic as Disney and with so many challenges and opportunities has refused to seriously engage with us, its largest active shareowner, about board representation,” said Nelson Peltz, Trian’s CEO. “Instead of having a boardroom that would include directors with an ‘ownership mentality’ that can bring fresh perspectives to the Company’s challenges, Disney is resisting change and asking shareholders to endorse a Board comprised mainly of legacy directors (and their hand-picked successors) who have repeatedly failed to properly plan for CEO succession, misaligned the incentives of management, and failed to oversee or drive a strategy to get the streaming business to profitability or the studios to produce good content. Are Disney shareholders really to believe the current Board is able to heal these self-inflicted wounds?”
Mr. Peltz continued, “We respectfully believe the answer to that question is ‘no’ and we will seek the support of shareholders for meaningful change in the Board’s composition. It is time to ‘Restore the Magic’ at Disney.”
Peltz and Rasulo believe the role of the Board is to set achievable but ambitious goals and challenge the executive team to develop a detailed strategy and plan of execution for achieving those goals. A major problem at Disney, in Trian’s view, is that the goals have been amorphous and the execution poor.
| Acknowledged Issue | Disney’s Current Path | Trian’s Goals & Initial Perspectives |
|---|---|---|
| Corporate Governance | Preserve as much of the status quo as possible by playing defense – evidenced by limited changes to compensation and succession processes | Adopt best-in-class governance; finally complete a successful CEO succession; and align management pay with performance |
| Streaming Profitability | “Focused on achieving significant and sustained profitability” – no guidance or tangible targets beyond breakeven | Target and achieve Netflix-like margins of 15-20% by FY 2027 |
| Future of ESPN | “Building ESPN into the preeminent digital sports platform” – lacking a tangible business plan or defined cost to shareholders | Commit to a reasonable, defined payback period and return profile on ESPN Flagship DTC and communicate it in detail prior to launch |
| Studio Creativity | “Improving the output and economics of our film studios” | Board-led review of creative processes and structure to restore leadership accountability and reclaim #1 box office position w/ leading economics |
| Parks and Experiences Growth | “Strategically investing in our Experiences business to turbocharge growth” | Execute on a clear vision for Parks targeting at least high-single digit operating income growth to ensure adequate returns on ~$60bn of capex |
“We will have much more to say about these goals and the initiatives necessary to achieve them when we release our full presentation to shareholders,” continued Mr. Peltz. “But to be clear, Disney needs to again be the beacon of strategic clarity and exceptional execution it once was. No Disney shareholder should be content with the current strategic muddle or have to endure failed execution without accountability.”
Jay Rasulo added, “Nelson and I are not about strategic platitudes or soft goals. As Disney Board members, we would expect to help drive Disney’s financial performance by working with other Board members to set demanding but realistic goals (to which executive compensation will be tied) and provide rigorous oversight to help ensure accountability for operational execution and capital allocation. Disney was founded and built by owners. We believe restoring the magic at Disney starts with a focused, aligned and accountable board, intensely committed to returning an ‘ownership mentality’ to the boardroom. That, and a heavy dose of best-in-class corporate governance is the medicine Disney needs to fix its ailing shareholder returns.”
Disney has recommended that shareholders vote no on the proposal by Trian.
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!
Should Disney be run by Gordon Gecko sharpies? This noble-sounding “ownership mentality” is really about maximizing profits.