Achi news desk-
New York –
Disney won a tough proxy battle against a group of activist investors seeking seats on the company’s board of directors. The shareholder vote served as a legacy-defining victory for CEO Bob Iger.
Disney’s board won by what the company called a “significant margin” over candidates proposed by Trian Fund Management and Blackwells Capital at its annual shareholder meeting.
Iger didn’t just beat Trian’s Nelson Peltz, he killed him, according to a person familiar with the vote count.
Peltz’s attempt to grab a seat on the board received less than a third of the votes, about 31%, according to the source. Jay Rasullo, the former Disney chief financial officer who joined Peltz’s effort, also lost by a wide margin, the person said.
Retail shareholders, who own about 35% of Disney shares, also voted overwhelmingly – 75% – for Disney’s nominees. Still, board members typically receive amounts far greater than three-quarters of the vote, suggesting Peltz has captured a lot of interest from Average Joe shareholders.
At the same time, Peltz is spending a lot of cash on the fight, and the fact that he didn’t come very close to winning a board seat was surprising.
“This is undoubtedly Peltz’s biggest loss in the proxy fight,” said someone familiar with the vote.
After her defeat, Trian issued a statement saying she was disappointed with the result but appreciated “the support and dialogue we have had with Disney stakeholders.”
“We are proud of the impact we have had in refocusing this company on value creation and good governance,” the statement said. “We will watch the company’s performance and focus on its continued success.”
“With the distracting proxy contest now behind us, we are eager to focus 100 percent of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers,” Iger said.
Referendum on Iger
The investor fight that culminated on Wednesday was seen as a referendum on Iger, who is more than a year into his second term as CEO.
Although Disney’s stock has risen nearly 50% over the past six months, some investors — including Trian and Blackwells — were hoping for higher returns and a stronger shakeup inside the Mouse House. In particular, Trian wanted to match pay to the performance of key executives, restore Disney’s dominance at the box office and expand the company’s profit margins.
The biggest challenge came from Trian, which appointed its founder, the 81-year-old corporate raider Peltz, to the board, along with Rasolo, the former Disney chief financial officer.
Peltz expressed political differences with Iger who had driven his campaign. In a recent interview with the Financial Times, Peltz blasted the Marvel and Black Panther movies as pushing what Republicans often call a “woke” agenda.
“Why do I need an all-female Marvel? Not that I have anything against women, but why do I have to do this? Why can’t I have Marvels that are both? Why do I need an all-black team?” Peltz told the FT.
Disney remains one of the most successful media giants on the planet, but it has also seen parts of its empire stumble in recent years.
Many of her problems stem from working to run a sprawling media conglomerate in the 2020s: the once-profitable tentpole of linear TV is rapidly crumbling, while its theoretical replacement, streaming services, is burning through cash. Higher interest rates took their toll, and moviegoers grew bored with Disney’s recent ongoing Marvel spin-offs and sequels.
“In some ways, the challenges are bigger than I expected,” Iger said last year in an interview with CNBC.
A Disney logo forms part of a menu for the Disney Plus streaming service on a computer screen in Walpole, Mass., on Nov. 13, 2019. (AP-Steven Senne / The Canadian Press)
Expensive battle on the board
Peltz and other shareholders seized on these stumbles to rally support for change. Trian Partners said in a regulatory filing that it expects to spend about $25 million on its campaign for board seats.
If the Trian group were successful in securing seats on the board, it would be a seismic blow to Iger’s reputation as one of Hollywood’s most formidable power players. And it would have allowed activists to shape or disrupt Iger’s vision of the organizational turnaround.
But it was not clear that Peltz’s plan – essentially maximizing profit and tying executive pay to performance – would be fundamentally different from what Iger was already doing.
A year ago, Iger announced he was laying off 7,000 workers and implementing a restructuring plan aimed at reinvigorating Disney’s core creative departments.
There are early signs that his turnaround plan is working. In February, Disney surprised investors with its first-quarter earnings, announcing that it would increase earnings per share by 20% this year.
Having ousted Peltz and Trian, at least for now, Iger likely has a path to focus on the growth phase of his program, at least until his contract expires in 2026, when Iger promises he will retire. But one former Disney executive said the battle is far from over.
“The fact that it’s gotten this much traction tells you there’s a lot of discontent,” the former executive, who requested anonymity to speak candidly, told CNN’s Oliver Darcy before the vote.
CNN’s Samantha Deloitte and Oliver Darcy contributed to this report.
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