Three-Way Fire in the Board Battle for Disney

The Peltz-Perlmutter cabal goes up against Bob Iger and the Disney kids, Blackwells Capital attacks both factions and ISS plays the wild card as the conflict is brought to a head at the annual April 3 meeting

The last time Disney faced a full-fledged proxy fight was 20 years ago. More than 40 percent of shareholders voted against the Disney board and its then-CEO, Michael Eisner. The executive lost his chairman title within hours and told the board of his plans to step aside as CEO in mere months.

A turning point in that battle, as Bob Iger recalled in his 2019 memoir, The Ride of a Lifetime, was the decision by the influential Institutional Shareholder Services (ISS) to back the activists. “I remember thinking that it was like we’d entered a conventional war … and now another party had launched nuclear weapons,” Iger wrote of learning about the ISS recommendation, noting that the organization “typically influences more than a third of the voting shares in a proxy election.”

Disney is once again facing an activist proxy fight at a moment of weakness, with Nelson Peltz’s Trian Partners (backed by former Marvel chairman Ike Perlmutter’s $3 billion or so of Disney stock) aiming to put Peltz and former Disney CFO Jay Rasulo on the board, and another activist, Jason Aintabi’s Blackwells Capital, nominating three directors of its own. ISS is expected to issue its recommendation for this year’s Disney proxy filing about two weeks ahead of the annual meeting

April 3, and observers will be paying close attention in the event (however unlikely) they decide to go nuclear again.

And there are other variables this year. A startup, Shareholder Vote Exchange, lets retail shareholders who are ambivalent about the proxy sell their votes to others. The firm says that a party has bid $100,000 for 500,000 Disney proxy votes. To buy 500,000 shares at market prices would cost more than $56 million, as of this writing, but the votes can be acquired for pennies on the dollar. There is precedent to suggest that such votes could make a difference. In Peltz’s 2017 activist campaign against Procter & Gamble, the preliminary results saw Peltz win by just 42,000 votes. “It’s uncertain whether that many votes will be enough to swing the outcome one way or another, especially given the involvement of multiple other activists such as Blackwells, ValueAct and Ancora,” says Steven Xu, co-founder and COO of the Shareholder Vote Exchange. “But the dueling sides don’t have much of a choice at this point. Trian owns billions of dollars worth of Disney stock, and Bob Iger is looking to reassert his authority and define his legacy at Disney.”

While there are some surface similarities, this year’s proxy fight is radically different from 2004. This time, the Disney family has unified around

Iger, including Roy P. Disney, as well as Abigail Disney (who once compared Iger to Ebenezer Scrooge).

In addition, the children of Roy E. Disney have signed a letter calling Trian and Blackwells “wolves in sheep’s clothing.” And while the wild card in 2004 was concern about a hostile Comcast takeover, this time Blackwells seems to be spending as much time attacking Peltz and Trian (noting Peltz’s $600,000 security bill from his role on the Wendy’s board, and referring to fellow Trian nominee Rasulo as a “disgruntled former employee”) as it is challenging Iger.

While Disney’s stock price has rebounded after the

Feb. 7 earnings call, in which Iger rattled off a slew of new projects, like a Moana animated sequel, a $1.5 billion investment in Epic Games and the acquisition of Taylor Swift’s Eras Tour movie for Disney+, Trian has remained dismissive. Peltz called the news a “throw spaghetti on the wall and see what sticks” strategy.

Peltz has run more than a few successful proxy fights, mostly in the consumer goods space, and has some high-profile friends (another Iger nemesis, Tesla founder

Elon Musk, was pictured Feb. 3 standing alongside Peltz at the L.A. premiere of Lola, directed by Peltz’s daughter

Nicola Peltz Beckham). But Disney’s corporate strategy is coming together. And unlike in 2004, when a majority of Disney’s own employees voted to withhold their votes for Eisner (as recounted in the 2005 book DisneyWar), there’s little question whose loyalty they share this time around.

Bob Iger