The New Disney Drama: Disney Is Opposing Activist-Investor Nelson Peltz
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Nelson Peltz plans to stage a fight for a spot at Walt Disney Co. Activist investor Nelson Peltz is pushing for a seat on Disney's board, the company confirmed Wednesday, saying it had recommended shareholders vote against his efforts.
Disney Drama
The company's board of directors is asking shareholders to vote against it at its upcoming annual meeting.
Disney said that while members of its senior management team have contacted Peltz on numerous occasions over the past few months.
Peltz's Trian Fund Management executives met in California on Tuesday with top Disney executives, including Iger and CFO Christine McCarthy, in an attempt to reach an agreement with the company and avoid a proxy battle, but the talks were fruitless.
Arnold called Peltz on Wednesday morning to offer him the role of board observer and ask him to sign a cease and desist agreement. The proposal was met with Peltz's refusal.
Mark Parker would become president
Disney revealed the activist's intentions Wednesday afternoon in a statement saying it was opposed to him being added to the board.
It was also stated that current director Mark Parker would become president, succeeding Susan Arnold.
Disney said its new CEO, Parker, will lead a newly formed succession planning committee that will advise the board on a new CEO and look at internal and external candidates. The company added that it was constantly refreshing its board of directors, focusing on directors with industry experience. Iger's mandate is to serve a full two-year term with the company.
Trian's intentions
Almost two months ago, Trian bought a stake in the company worth about $800 million and began looking for a place on the board. Trian is looking to make operational improvements and cut costs, according to the company's announcement on Wednesday.
Trian believes Disney has excessive compensatory practices and lacks cost discipline. Peltz has repeatedly criticized Iger for orchestrating Disney's $71.3 billion acquisition of 21st Century Fox's assets in 2019. This acquisition, along with the pandemic, left Disney with approximately $45 billion in debt. According to Peltz, Disney drastically overpaid.
Trian also said he did not want to replace Bob Iger as CEO. Instead, Trian said, he wants to work with Iger to ensure a successful CEO change over the next two years. Iger's stunning comeback in November brought the promise of a two-year apprenticeship that would spark a renewed growth. The CEO also plans to help find another successor after the term of his previously elected successor, Bob Chapek, fell apart
Disney share price
The new Disney drama comes after a difficult year for the entertainment giant's stock as soaring streaming costs and a small number of theatrical releases have eaten away at profits.
Disney has a market capitalization of over $175 billion. The stock plummeted from a high of around $200 in early 2021 to a 52-week low of $84.07 on December 28.
The stock closed at $96.33 on Wednesday. Which shows that in the new year the shares have improved.
Source: wsj.com, finance.yahoo.com
