Disney explained on Thursday what Nelson Peltz was thinking and appealed directly to shareholders to vote the activist investor on board.
Throw it straight into the trash.
House of Mouse, under the leadership of returning CEO Bob Iger since November, said that giving Trian Fund Management co-founder a seat at the table threatens to destroy the entire company’s strategy at a delicate juncture and must be stopped.
“We are skeptical of his motives and believe he will be disruptive at an important time for Disney,” he said in a statement. “In fact, Mr. Peltz sought a board seat before becoming a shareholder.”
This could be a potential reference to the investor’s friendship with Ike Perlmutter, Disney’s main shareholder since he sold Marvel to the company in 2009. Both billionaires live in Palm Beach, Florida, and support Donald Trump, a critic of the media group. and advanced staff.
Perlmutter’s relationship with the media giant has been strained, especially after Iger tapped Marvel Studios chief Kevin Feige to be free of Perlmutter’s interference.
according to The Hollywood Reporter, Peltz held discussions with Disney CEO Bob Chapek last July with Perlmutter’s support. But any plans he may have had will be scrapped after Chapek was sacked at the end of November.
Disney wants shareholders to vote only after management presents a new strategic plan
On Thursday, Disney’s board told shareholders that they don’t need someone like Peltz advocating for them, because their interests are represented by no less than 10 of the 11 independent board members from the day-to-day executive team managed by Iger.
He urged shareholders to support the re-election of former U.S. Trade Representative Michael Froman to the board and to vote against the investment firm’s nomination of Peltz.
“Decades of experience in business and international affairs are essential to helping Disney assess risks and opportunities in an increasingly complex global market,” it wrote.
One recent deal underscores that point. Disney recently secured Beijing’s regulatory approval to bring it Black Panther: Wakanda Forever to China starting next week, ending a ban from July 2019—before the pandemic.
The board, therefore, asked investors to hold off until they could begin submitting materials for the unscheduled annual general meeting, including a white proxy card with Froman on the ballot.
At that point, management can present the case to investors on how the company will grow moving forward.
“Shareholders should give themselves the benefit of voting on an informed basis, take the board and the management team important updates on the strategy to create value,” he said. “If you have received the material with the blue proxy card from Trian Group, please discard it.”
Trian Fund Management, which claims to own $1 billion in Disney shares, did not immediately respond to a request from fortune for comments.
Peltz says Disney is a ‘company in crisis’
Peltz is no stranger to shareholder battles and has never backed down from a fight.
The Floridian is a veteran of three proxy wars that have divided management with investors: first with Heinz in 2006, then DuPont in 2015 and finally Procter & Gamble two years later.
Trian said Disney is a “company in crisis” whose problems are “primarily its own,” causing a loss of more than $120 billion in market cap last year that sent shares to an eight-year low.
It criticized everything from excessive management compensation and overpaying for Twenty-First Century Fox’s traditional media assets to a flawed streaming strategy that led to its first dividend suspension in 57 years.
Importantly, Trian claims that not opting for financial engineering by piling up Disney’s debt-laden balance sheet at the risk of reducing its solvency – a common request by short-term activist investors – also does not appear to damage the company or even replace Iger as CEO.
Disney did not play ball, however, arguing the opposition to Peltz based on over six months of conversations and written exchanges with Trian co-founder.
“He has demonstrated that he does not understand the Disney business and that he does not have the perspective and experience to contribute to the goal of delivering shareholder value in the media ecosystem as quickly as possible,” shareholders said on Thursday.
Disney released its fiscal first quarter results after the close of trading on February 8Thwith all eyes focused on the Direct-To-Consumer division responsible for the streaming business.
Chief financial officer Christine McCarthy promised in early November that DTC’s three-month loss peaked in Q4 at nearly $1.5 billion and should reduce by at least $200 million in Q1.
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