Bob Iger Emerges From Disney Fight Bruised But Not Broken

In fending off Nelson Peltz (and Ike Perlmutter) during a $40 million proxy battle, the CEO gets to keep his board seats and leeway to take part in succession planning — again

The moment that it started to seem possible that Bob Iger could lose the battle to keep dissident shareholder Nelson Peltz off the Disney board was on March 21, when leading proxy advisory firm Institutional Shareholder Services announced its support for the activist investor. Days later, the California Public Employees Retirement System (CalPERS) took it a step further, saying it was voting its shares not only for Peltz but for his associate, former Disney CFO Jay Rasulo. Now that it’s over, it’s fair to ask: What were they thinking?

ISS explained its decision by rattling off a string of issues, but the big one was succession, which had been notoriously botched with the Bob Chapek interregnum after Iger had postponed his retirement no fewer than four times. “Dissident nominee Peltz, as a significant shareholder, could be additive to the succession process,” ISS declared. CalPERS referenced seeking “fresh eyes” on the board.

The succession grievance is more than fair. But what, exactly, did ISS and CalPERS expect Peltz to add to the mix?

Did they seriously think that a Donald Trump-backing, Elon Musk-stanning Palm Beach octogenarian billionaire with no experience in entertainment could be trusted to deliver Disney into the right hands? A man backed by former Marvel chief Ike Perlmutter, a vitriolic, Iger-ousted, fellow Trump-supporting octogenarian Palm Beach billionaire?

ISS didn’t address the question of Perlmutter’s vitriol but did have something to say about Rasulo, Peltz’s sidekick in the fight. Almost comically, ISS noted that in a meeting, the former Disney CFO “came across as levelheaded and demonstrated no sign of resentment or ill will towards Iger” — the man who had denied him the top job nearly 10 years ago. Still, ISS advised shareholders not to back Rasulo, who at least had nearly 30 years of experience at Disney.

All this is not to say that Peltz lacks experience: He’s served on many boards, sometimes effectively. But Disney isn’t Heinz or Wendy’s. It depends on the creativity of mostly progressive artists, and at times the CEO walks a high wire, as Chapek’s debacle over Florida’s “Don’t Say Gay” law abundantly illustrated.

Perhaps to clarify how helpful he could be, Peltz gave an interview to the Financial Times in which he asked why an allBlack or female-led Marvel movie needed to be made. (If any of that sounds familiar, it might be because Perlmutter, when he was still at Disney, tried to block both Black Panther and Captain Marvel.)

Neither ISS nor CalPERS responded to queries regarding their decisions. But another, far smaller activist investor, Blackwells Capital, warned that the proxy fight would only prove expensive and distracting. “Mindless, drum-beating activism is not the right strategy for shareholders,” Blackwells chief investment officer Jason Aintabi told THR in December. In fact, the battle is believed to be the most expensive proxy fight in history, with Disney estimating its costs at around $40 million.

Iger and the board are now pledging that succession is a top priority — and Iger most likely means it this time. While he prevailed in the proxy fight, with more than 90 percent supporting his place on the board, the company is now dealing with a sort of unintentional replay of Time Warner’s 2013 ill-advised bakeoff that pitted the then-heads of television, film and home entertainment against one another.

Speculation is already rampant about which internal candidate(s) might get the job: Disney entertainment co-chairs Dana Walden (TV) and Alan Bergman (film), ESPN chairman Jimmy Pitaro and/or parks chief Josh D’Amaro. Says one Disney veteran: “What’s next is a year of intense politicking beneath the surface because Bob will not tolerate [open] politicking.” This executive thinks Peltz did himself in with “dumb, unforced errors about Black Marvel and female Marvel.” Still, Peltz mustered 31 percent of the vote. If Peltz had simply said he would focus on finding a replacement for Iger, this former insider believes he could have picked up 60 percent. Instead, he says, Peltz made himself look “ridiculous, out of touch and unhelpful.”