Disney Prepares for Bitter Battle as Activist Peltz Seeks Two Board Seats
Trian, an activist investment firm which owns approximately $3 billion worth of Disney shares, has decided to renew its bid for board seats in the media conglomerate. In February, Trian withdrew its earlier attempt for one board seat after Disney announced a comprehensive restructuring plan that addressed the firm’s concerns. Trian has now nominated activist investor Nelson Peltz and former Disney Chief Financial Officer James Jay Rasulo for the two independent director positions.
As Disney’s largest active shareholder, we can no longer sit idly by as the incumbent directors and their hand-picked replacements stand in the way of necessary change, Trian stated in a press release, outlining the rationale behind their two director nominations.
Initially, Peltz had hinted at nominating up to four directors but later reduced the number to two after Disney revised its bylaws and added two new directors. James Rasulo, a veteran theme park executive who served as the company’s chief financial officer in 2010, has joined forces with Peltz. Rasulo, however, left Disney in 2015 after being passed over as chief operating officer.
Peltz and Rasulo are now positioning themselves as the individuals capable of implementing crucial changes within Disney, including cost-cutting measures, developing a sensible succession plan, and revamping the company’s streaming operations.
Trian criticized Disney’s financial performance, highlighting that its per-share earnings in the most recent fiscal year are lower than a decade ago. The firm argues that Disney’s streaming business and media operations have lower margins compared to its peers, while movie releases consistently underperform expectations.
Disney responded to Trian’s nomination by stating that its diverse and highly qualified board is focused on the long-term performance of the company, strategic growth initiatives, increasing shareholder value, and finding a successor to Chief Executive Bob Iger.
Over the past year, Disney has undergone a significant restructuring, resulting in substantial cost reductions. The company anticipates achieving around $7.5 billion in cost savings, surpassing its original target by $2 billion. Additionally, Disney aims to make its streaming business profitable, boost the performance of its film studios, and drive growth in its theme parks through a $60 billion investment over the next decade.
Trian claimed that since February, when it initially withdrew its bid, shareholders have suffered a $70 billion loss in value. The investment firm also highlighted that Disney’s non-management directors collectively own less than $15 million of the company’s stock, and CEO Bob Iger has sold the majority of his ownership stake, indicating a lack of confidence in the company’s future prospects.
It is important to note that Trian is in partnership with Isaac Perlmutter, a former Marvel Entertainment executive who was ousted earlier this year.
Disney recently appointed James Gorman, the chair, and CEO of Morgan Stanley, and Jeremy Darroch, a media executive and former group chief executive of Sky, as new directors last month.
As this battle for board seats unfolds, it remains to be seen who will emerge victorious in shaping the future course of one of the world’s most iconic companies.
