Walt Disney is beginning to fend off a challenge from activist investor Nelson Peltz, who is nominating himself to the board in what could be a public debate over Chief Executive Bob Iger’s leadership.
Mark Parker, chief executive of Nike Inc., will take over as chairman from Susan Arnold, who is stepping down at the company’s next annual meeting, Disney said Wednesday. Parker will also lead a new succession planning committee to advise Iger, who has been criticized for failing to clear a replacement.
Disney said it rejected a proposal from Peltz’s Trian Partners LP to name a leader on the board, but “remains open to constructive engagement and ideas that can help drive shareholder value.”
The move pits one of the most prominent activist investors in corporate America against one of the most respected CEOs in the media. Peltz is known for his work on the boards of companies such as Mondelez International and Procter & Gamble Co. with plans to be more efficient, sometimes forcing their way through bruising proxy battles. Even if they were unsuccessful, like the campaign to put a Trian candidate on the DuPont board, the campaign led to changes in management and cost cutting.
In a blistering statement, Trian – who holds a $900 million stake in Disney – noted that the stock is close to an eight-year low, a reflection of what he says is a failure to plan for succession, “over-the-top” compensation practices and a lack of cost discipline. Among the issues, Trian said Disney overpaid when it bought Fox’s entertainment assets in 2019 for $71 billion.
“Disney’s recent performance shows the hard truth that the company is in crisis,” Trian said.
When investors called Disney’s self-inflicted problems, Trian said he was not looking to remove Iger or break the company up. But Peltz favors de-leveraging Disney and restoring the company’s dividend by 2025. The company launched a website, Restore the Magic, to get the message out.
The battle is an unusual rebuke from Iger, who was one of the most popular CEOs in the media when he first ran Disney between 2005 and 2020. He has repeatedly delayed his retirement as he struggles to choose a successor, and few possible replacements. company. Iger eventually handed over the title to Bob Chapek shortly before the Covid-19 pandemic became a major crisis in the US.
Last year, Disney’s board renewed Chapek’s contract, despite several missteps, including a public dispute with Florida’s governor. Just five months later, the board fired Chapek and rehired Iger, which analysts and corporate governance experts saw as a sign of poor succession planning.
In its statement, Disney said it had spoken with Peltz several times about the nomination, and other changes it wanted to the company’s bylaws. The company remains opposed to the appointment to the board.
Disney also pointed out that during Iger’s previous tenure, the stock rose 554%. Iger has taken “significant steps” to realign the company’s traditional TV and streaming businesses, the company said. Disney’s direct-to-consumer unit posted a loss of $1.47 billion during Chapek’s last quarter as CEO.
Arnold is the first woman to chair an entertainment giant. Former Procter & Gamble Co. executive. has been a director since 2007 and was named chairman after Iger, now 71, retires in December 2021.
Disney said Arnold had reached the board’s 15-year limit for directors. The annual meeting, which marks the end of his term, has not been scheduled.
The company’s stock has gained 10.9% this year through Wednesday’s close. It rose 1.4% in after-hours trading.
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