Activist investors fail to secure Disney board seats
LOS ANGELES — Activist investor Nelson Peltz and Ike Perlmutter, the former chair of Marvel Entertainment, have failed to infiltrate Disney’s board for the second time in two years, losing a tensely fought contest for support of the company’s shareholders as part of a campaign to alter its direction.
The Walt Disney Co. said Wednesday that shareholders had voted to elect its entire slate of board nominees by a “substantial” margin — thus rejecting a demand by Peltz’s hedge fund, Trian Partners, for two seats and endorsing a growth plan that Chief Executive Officer Robert Iger has laid out.
Trian controls about $3.5 billion in Disney stock, a vast majority of which is owned by Perlmutter. He and Peltz, both 81, had also tried to shake up the Disney board last year, abandoning the effort after Iger unveiled a sweeping turnaround plan.
“With the distracting proxy contest now behind us, we’re eager to focus 100% of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers,” Iger said.
Peltz received 31% of the vote from shareholders who thought he should join the company’s board, according to a preliminary count. In a statement, Trian said that it was “disappointed” with the outcome but that it was “proud of the impact we have had in refocusing this company on value creation and good governance.”
Disney shares declined about 2% after the results were announced.
The latest Disney-Trian contest devolved into one of the largest, priciest and nastiest in history. Trian spent about $25 million on its offensive, while Disney priced its defense at up to $40 million, according to securities filings. Both sides inundated investors with political-style campaign materials, including mailings, emails, social media ads, videos and phone calls.
Trian harshly criticized Disney’s streaming strategy, lagging stock price and succession planning. Disney denounced Trian as “disruptive and destructive” and portrayed Perlmutter as being driven by revenge.
Perlmutter sold Marvel to Disney in 2009 for $4 billion and joined the company’s leadership team. In 2012, Disney negotiated settlements with three Black consumer products executives who accused Perlmutter of mistreatment. In 2016, Perlmutter sought to fire Kevin Feige, Marvel’s movie chair, for spending too much ($250 million) to make Captain America: Civil War, which sold $1.2 billion in tickets. Iger overruled him. Perlmutter also resisted making inclusion-oriented movies such as Black Panther, which collected $1.4 billion.
Iger finally ousted him last year.
By winning the support of shareholders Wednesday, Iger can push forward with his growth plan for Disney — one that includes overhauling ESPN for the streaming era, spending $60 billion on new theme park attractions and cruise ships, and finding a new generation of hit movies.
But the victory did not leave Iger, 73, without bruises.
At first, he seemed poised to easily win. Prominent Disney investors such as George Lucas and Laurene Powell Jobs publicly offered support. Disney family members, including Abigail E. Disney, blasted Peltz and his associates as “wolves in sheep’s clothing.” Analysts (Guggenheim, Macquarie) and shareholder advisory firms (Glass Lewis, ValueEdge) threw cold water on Trian’s campaign.
It became a much closer contest after ISS, an influential shareholder advisory firm, partly sided with Trian. Peltz also won the backing of Egan-Jones, another advisory; it faulted Disney for unnecessarily veering into what it called “the killing fields of the culture wars,” a reference to Disney’s blowup with Gov. Ron DeSantis of Florida over an education law that opponents labeled “Don’t Say Gay.”
One large investor that backed Peltz, the California Public Employees’ Retirement System, or CalPERS, which owns about 6.6 million Disney shares, said the company would benefit from “fresh eyes.” It added that Peltz was “capable of leading needed change in corporate governance.”
In the end, Disney’s two biggest shareholders, Vanguard and BlackRock, which own a combined 12% of the company’s shares, ignored ISS and voted for Iger’s slate of directors. Iger also won crucial backing from small-fry investors: An unusually large amount of Disney shares (up to 40%) are held by individuals, many of them fans of the company’s movies and theme parks. (On average among public companies, individuals own closer to 15% of the shares.)
About 75% of individual shareholders voted to elect the Disney slate, according to the preliminary tally.
Iger returned to run the company in 2022 — two years after he had retired — when the Disney board fired his hand-selected successor, Bob Chapek. During his earlier, 15-year stint, Iger delayed his retirement four times and seemed reluctant to leave when he did.
Ever since his return, Iger has encountered a seemingly nonstop array of challenges: repeated attacks by activist investors, sparring with DeSantis over control of government services at Disney World in Florida, two union strikes that shut down Hollywood for six months, the collapse of Walt Disney Animation films at the box office and even rebukes voiced and written by Elon Musk.
“Regardless of the outcome of today’s vote, Trian will be watching the company’s performance,” Peltz said at the meeting before the results of the vote were announced. “Trian still has continuing concerns about the current strategy,” he said. “All we want is for Disney to get back to making great content and delighting consumers — and for Disney to create sustainable long-term value for all of the shareholders.”