Disney (DIS) activist investor Nelson Peltz has been fighting for months to overhaul the company's board of directors. Investors will soon find out if he has won.
The results of the shareholder vote to elect board members are expected to be announced at the entertainment giant's annual general meeting on Wednesday, but a last-minute agreement between the two parties could be reached before then. Voting officially ends on the day of the meeting.
This is a critical moment for Disney, as the company tries to entice consumers to migrate from traditional cable packages to its largely unprofitable streaming service. The company is also facing succession issues as CEO Bob Iger's contract expires at the end of 2026.
Mr. Peltz recently secured the backing of leading proxy advisory firm Institutional Shareholder Services (ISS), which has secured board seats for himself and former Disney chief financial officer Jay Laslo. I'm looking for. Mr. Peltz's hedge fund, Trian Fund Management, owns $3 billion in Disney common stock.
Mr. Peltz is seeking to replace two existing directors, former Mastercard executives Michael Froman and Maria Elena Lagomasino.
In multiple presentations and an open letter, Trian cited tens of billions of dollars in lost shareholder value, declining consensus revenue projections for the next two years, and disappointing studio content as some of the reasons for pushing forward. Ta.
Disney, backed by the high-profile proxy firm Glass Lewis, defended Mr. Froman and Mr. Lagomasino in a statement to Yahoo Finance, calling them “highly regarded and dedicated members of the board.” member.”
The company said it had made “significant progress” in rebuilding its business. Some of the changes include raising prices for streaming services and theme parks, cracking down on password sharing, and introducing ad-supported slots on streaming service Disney+.
Investors have reacted positively to the change, with Disney stock up more than 30% this year.
Successor is at the heart of the proxy battle
Succession has been a particular sticking point for Peltz and his supporters after the chaotic ouster of former CEO Bob Chapek in 2022. Chapek's tenure has been filled with controversy, from political disputes and top talent issues to a controversial reorganization and the ever-looming corporate shadow. Iger had voiced opposition to some of Capek's decisions even before his return.
“What is still missing is concrete progress towards a succession to give investors enough confidence that the company will not be stranded after Iger’s departure and thereby avoid a future revolt.” ,” ISS wrote in a recommendation in support of Mr. Peltz earlier this month.
Disney claims that it is “actively engaged in the high-priority task of succession planning.”
“Each internal candidate undergoes a rigorous preparation process,” the company said in a letter to shareholders. “This includes mentoring and external coaching from Bob Iger, engagement with all board members, and a comprehensive review of each candidate.”
Disney has not yet announced the names of internal candidates being considered for the position. However, ISS noted that the board highlighted the efforts of certain leadership members, including Disney Entertainment co-chairmen Alan Bergman and Dana Walden. Josh D'Amaro, Chairman, Disney Experience; Jimmy Pitaro, ESPN Chairman. and Asad Ayaz, the company's chief brand officer.
Other activists join the fight
Beyond ISS, Mr. Peltz has received support from other prominent shareholders, such as fellow activist investor Mr. Ancora.
Additionally, more than a dozen current and former directors of public companies sent a letter to the Disney board last week in support of Mr. Peltz and his Tryon Fund.
Meanwhile, ValueAct Capital has taken on Mr. Peltz, giving Disney another boost in its fight against the billionaire investor. The activist has an information-sharing agreement with Disney, guaranteeing support for the media giant's recommended list of director candidates in exchange for information.
JPMorgan CEO Jamie Dimon has also publicly supported Disney's current board, along with Bob Iger's leadership. Notably, the bank currently serves as defense advisor to the media giant.
Disney also has support from filmmaker and Star Wars creator George Lucas. Grandson of Walt Disney and his brother Roy. and Laurene Powell Jobs, the widow of Apple CEO Steve Jobs and a longtime investor in the company.
In addition to Mr. Peltz, Disney is also facing pressure from activist Blackwells Capital. Blackwells Capital supports the company's current board of directors, but urges shareholders to vote for three candidates to join the company's board.
With contributed reports from says David Hollerith of Yahoo Finance.
alexandra canal I'm a senior reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, Please email alexandra.canal@yahoofinance.com.
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