Disney set for battle as activist investor Peltz asks for seat on board

The Walt Disney Company is setting itself up to fight activist investor Nelson Peltz after calling on shareholders to reject his move to gain a seat on the company’s board.

Peltz’s Trian Fund Management nominated the billionaire investor for election as director in opposition to the nominees recommended by the board, and brought a proposal to amend Disney’s bylaws.

Peltz has criticised Disney over its succession planning, spending too much to acquire the assets of 21^st Century Fox and for giving too high a compensation package to CEO Bob Iger.

Trian, while holds about 9.4 million Disney shares valued at around US$900 million, yesterday made a presentation criticising Disney’s performance and calling for a change of direction.

“Disney has an incredible legacy as one of the leading and most successful consumer entertainment companies in the world, having built some of the most celebrated consumer brands and an unparalleled content portfolio that resonates with audiences of all ages across the globe. But in recent years, the Company has lost its way resulting in a rapid deterioration in its financial performance from a consistent dividend-paying, high free cash flow generative business into a highly leveraged enterprise with reduced earnings power and weak free cash flow conversion,” said Peltz.

“Disney has enormous potential, but today is struggling with numerous challenges and must act with urgency to accelerate profitability in its DTC business. As a highly engaged shareholder serving on Disney’s Board, my goal would be to work collaboratively with Bob Iger and other directors to take decisive action that will result in improved operations and financial performance, enhanced shareholder value and a robust succession planning process that will set the stage for sustainable growth over the long term. Trian has studied Disney’s business for over a decade, and we are confident that as an independent voice I can add significant value in the boardroom and represent the interests of all Disney shareholders.”

Trian said that Disney’s share price and operating performance had been “disappointing” and noted that the company was currently trading at an eight-year low despite its decision to re-hire Bog Iger as CEO.

The group said it was not looking to replace Iger or break up Disney, but wanted top focus on improving direct-to-consumer operating margins and cutting costs.

Disney said it had engaged with Peltz numerous times over the last few months, but that its board does not endorse the Trian Group nominee and recommended that shareholders not support his election.

The company defended Iger’s performance during his earlier tenure as CEO and said he had already taken decisive steps to realign content creation and distribution, and reposition Disney’s streaming platforms and linear broadcast and cable networks.

Disney has meanwhile also nominated Mark Parker as chairman of the board, effective following its Annual Meeting of Shareholders.

Parker, a seven-year member of the Disney board and executive chairman of Nike, will succeed Susan Arnold, who is not standing for re-election in line with Disney’s 15-year term.

The size of the board will be reduced to 11 members following the appointment.

Parker will also chair a newly created Succession Planning Committee of the Board, which will advise the Board on CEO succession planning, including review of internal and external candidates.

Parker served as Nike’s chairman and CEO until 2020, when he became executive chairman.