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Disney has defeated a challenge to its board from activist investor Nelson Peltz, handing a definitive victory to chief executive Bob Iger and ending one of the most expensive and closely watched boardroom battles in history.
The entertainment giant on Wednesday announced shareholders had voted in favour of its 12 nominees “by a substantial margin”. Large investors, including Vanguard and BlackRock, backed Disney in a blow to Peltz’s Trian Partners.
About a third of Disney’s shareholder base is composed of individuals — many of whom are enthusiasts of its theme parks and characters. Some three-quarters of these retail shareholders voted for Disney’s nominees, said a person familiar with the matter.
Only about 31 per cent of all shareholders voted in favour of adding Peltz to the board, this person said.
The results bring to an end one of the most contentious proxy fights in years, which started in January 2023 after Trian disclosed a significant stake in Disney.
Peltz’s firm initially called off a proxy fight in February before reigniting the feud months later, armed with a bigger stake worth roughly $3.5bn. Ike Perlmutter, the former Marvel executive and longtime friend of Peltz who was laid off from Disney last year, contributed his shares to the fight.
Peltz had urged shareholders to put him and former Disney executive Jay Rasulo on the board and to deny seats to two current Disney directors: Michael Froman and Maria Lagomasino.
Blackwells Capital, another activist, put three nominees forward, who were also denied in the vote. Blackwells said it had achieved its “main objective” which was “keeping Nelson Peltz out of the Disney boardroom”.
Trian said it was disappointed with the outcome but “greatly appreciates all of the support and dialogue we have had with Disney stakeholders”. It would be watching the company’s performance and “focusing on its continued success”, it said.
While Peltz did not seek to oust Iger, the fiery contest resembled a referendum on the CEO’s ability to turn around Disney’s fortunes. The veteran activist investor dismissed Iger’s recent initiatives to bolster the entertainment group’s shares as “throwing spaghetti at the wall” to see what sticks.
The 81-year-old billionaire had called on Disney to cut costs and achieve “Netflix-like” profit margins in its streaming business, while criticising its “woke” movie strategy, telling the Financial Times recently: “Why do I have to have a Marvel that’s all women? . . . Why do I need an all-Black cast?”
The vote of confidence will bolster Iger, who is widely considered to be Hollywood’s most powerful executive, as he tries to steer Disney through a wrenching transformation.
“I want to thank our shareholders for their trust and confidence in our board and management,” Iger said. “With the distracting proxy contest now behind us, we’re eager to focus 100 [per cent] of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers.”
Disney’s share price has gained more than 50 per cent over the past six months, but it remains well below the highs reached three years ago.
The contest split influential proxy advisers, with Glass Lewis recommending shareholders back Disney, while ISS recommended adding Peltz to the board.
The proxy battle played out like a political campaign, with each side pouring tens of millions of dollars into pamphlets, phone calls and videos imploring shareholders to “vote white” for Disney, or “vote blue” for Trian.
Disney spent $40mn on the proxy battle while Trian has invested $25mn and Blackwells has put $6mn into its push.
Iger, who at one point considered a run for the White House, enlisted business leaders and personal friends to vouch for him. The likes of JPMorgan chief Jamie Dimon, Star Wars creator George Lucas, Laurene Powell Jobs, and the grandchildren of Walt Disney all threw their support behind Iger.
In fending off the activists, Iger unveiled a host of initiatives to please investors: raising Disney’s target for free cash flow, announcing a $1.5bn investment into Epic Games, promising steep cost cuts and declaring a 50 per cent dividend increase as well as a $3bn share buyback.
Among Peltz’s biggest complaints was Iger’s botched succession process, reviving an issue that has dogged Disney for decades as its chief executives have been reluctant to retire. Iger extended his contract repeatedly during his tenure as CEO from 2005 to 2020, and his successor, Bob Chapek, was fired after less than three years.
“Leadership changes have been the Achilles heel of Disney,” said Needham analyst Laura Martin. “Succession will be the most important test of the new board, no matter who they are.”
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