Disney won a hard-fought proxy battle against a group of activist investors who sought to secure seats on the company’s board of directors. The shareholder vote served as a legacy-defining victory for CEO Bob Iger.
Disney’s board triumphed by what the company called “a substantial margin” over the nominees put forward by Trian Fund Management and Blackwells Capital at its annual shareholder meeting.
Although Disney’s stock is up nearly 50% over the past six months, some investors — including Trian and Blackwells Capital — had hoped for higher returns and a more forceful shakeup inside the House of Mouse. In particular, Trian wanted to align pay with performance for key executives, restore Disney’s box office dominance and expand the company’s profit margin.
Iger didn’t just beat Trian’s Nelson Peltz, but trounced him, according to a person familiar with the vote count.
Peltz’s attempt at a board seat received less than one-third of the vote, around 31%, according to the source. Jay Rasulo, the former Disney finance chief who joined Peltz’s attempt, also lost by a wide margin, the person said.
Retail shareholders, which hold roughly 35% of Disney stock, also voted overwhelmingly – 75% – for Disney’s candidates. Still, board members typically get far bigger totals than three-quarters of the vote, suggesting Peltz captured some strong interest from Average Joe stockholders.
At the same time, Peltz spent gobs of cash on the fight, and the fact that he didn’t come particularly close to winning a board seat was surprising.
“This is by far Peltz’s biggest loss in a proxy fight,” the person familiar with the vote said.
Following its defeat, Trian issued a statement saying it was disappointed with the outcome but appreciated “the support and dialogue we have had with Disney stakeholders.”
“We are proud of the impact we have had in refocusing this company on value creation and good governance,” the statement read. “We will be watching the company’s performance and be focusing on its continued success.”
“With the distracting proxy contest now behind us, we’re eager to focus 100% of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers,” Iger said.
A referendum on Iger
The investor fight that came to a head Wednesday was widely seen as a referendum on Iger, who is more than a year into his second stint as CEO.
The biggest challenge came from Trian, which nominated its founder, 81-year-old corporate raider Peltz, to the board, along with Rasulo, a former Disney finance chief.
Peltz had expressed political differences with Iger that animated his campaign. In a recent interview with the Financial Times, Peltz disparaged “The Marvels” and “Black Panther” movies as pushing what Republicans often call a “woke” agenda.
“Why do I have to have a Marvel that’s all women? Not that I have anything against women, but why do I have to do that? Why can’t I have Marvels that are both? Why do I need an all-Black cast?” Peltz told the FT.
Disney remains one of the most successful media behemoths on the planet, but it has also seen parts of its empire stumble in recent years.
Many of its problems come with the job running a sprawling media conglomerate in the 2020s: The once-lucrative tent pole of linear TV is rapidly crumbling, while its theoretical replacement, streaming services, are burning through cash. Higher interest rates have taken their toll, and movie theater audiences have grown bored with Disney’s more recent continued Marvel spinoffs and sequels.
“In some ways, the challenges are greater than I anticipated,” Iger said last year in an interview with CNBC.
An expensive battle for the board
Peltz and other shareholders have seized on those stumbles to rally support for change. Trian Partners has said in a regulatory filing that it expected to spend about $25 million on its campaign for board seats.
If the Trian group had succeeded in securing board seats, it would have been a seismic blow to Iger’s reputation as one of Hollywood’s most formidable power players. And it would have allowed the activists to potentially shape or disrupt Iger’s vision for the corporate turnaround.
But it wasn’t clear that Peltz’s plan — essentially maximizing profit and tying executive pay to performance — would be substantially different from what Iger was already doing.
A year ago, Iger announced he was laying off 7,000 staff and implementing a restructuring plan aimed at energizing Disney’s core creative departments.
There are early signs his turnaround plan is working. In February, Disney surprised investors with its first-quarter earnings, announcing it would grow earnings per share by 20% this year.
Having fended off Peltz and Trian, at least for now, Iger likely has some runway to focus on the growth phase of his plan, at least until his contract runs out in 2026, when Iger promises he’ll step down. But one former Disney executive said the fight is far from over.
“The fact that it has gotten this much traction tells you that there is a lot of dissatisfaction,” the former executive, who requested anonymity to speak candidly, told CNN’s Oliver Darcy ahead of the vote.
—CNN’s Samantha Delouya and Oliver Darcy contributed to this report.
