Disney Shareholders Reject Board Nominees Put Forth By Activist Investor Nelson Peltz

It’s official, Disney investors voted against activist investor Nelson Peltz’s bid to get seats on the company’s board.

Instead, they’ve re-elected all 12 board members backed by Disney, including present CEO Bob Iger. This marked the conclusion of the most expensive corporate proxy battle in the history of proxy battles. 

Peltz Firm, Trian Partners Fall Short

The voting results were announced on Wednesday during Disney’s 2024 virtual shareholder meeting. Nelson Peltz, from investment firm Trian Partners, fell short of the number of votes he needed to join the board, and neither did Trian’s other pick, former Disney executive Jay Rasulo.

The meeting was presided by Horacio Gutierrez, Disney’s senior EVP and chief legal and compliance. He said the initial votes showed that Disney’s 12 directors were reelected by a “significant margin” over the candidates from Trian and another investment firm, Blackwells Capital.

Igor Secures Re-Election In Landslide Victory

He noted that the final vote counts would be disclosed in future meeting minutes. According to the preliminary results, Iger won reelection with 94% of the votes in his favor, while Peltz garnered only 31%, and Rasulo even less.

Maria Elena Lagomasino, the current Disney director whom Trian had urged investors to remove from the board (along with board member Michael Froman), received twice as many votes as Peltz and five times as many as Rasulo.

Board Candidate Slates And Chairman’s Gratitude

Investors chose from three sets of board candidates: Disney’s 12-member lineup, Trian’s Peltz and Rasulo, and three from Blackwells, but none got enough votes for board seats. Shareholders could vote for up to 12 candidates.

Following the vote, Disney’s chairman, Mark Parker, thanked shareholders for investing in Disney and believing in its future, especially during a time of major industry changes.

Board’s Commitment, Experience and Planning Praised

He noted the company’s luck with a highly skilled board committed to its success and having vast experience, including planning for the future.

The re-elected CEO, Iger, also thanked shareholders for trusting the board and management. He showed the company’s eagerness to concentrate on its top goals: growing and adding value for shareholders and delivering creative excellence for consumers.

Peltz Campaign Cites Need For Change

Peltz’s Trian campaign focused on the necessity for change in Disney’s board, pointing out the company’s stock underperformance and problems with CEO succession planning. Disney countered his arguments, stating that the board was already in the process of choosing a CEO led by experienced leaders.

Peltz’s defeat indicates trust in Iger and the current board, bringing relief to Iger who might have been worried about directly handling Peltz as a board member.

Campaign Draws Attention To CEO Succession Plans

Peltz’s campaign has drawn attention to Disney’s plan for selecting the next CEO and raised questions about who will replace Iger when his contract ends in 2026.

An influential advisory firm, Institutional Shareholder Services, recommended that shareholders vote for Peltz to join the Disney board (except for Rasulo), highlighting Disney’s perceived shortcomings in CEO succession planning.

Disney’s Struggles In Finding A New Successor

Disney has struggled to find a successor for the CEO role after Iger. In 2019, Iger announced his intention to step down in two years when his contract expired. He jokingly remarked, “I was going to say, ‘This time I mean it,’ but I’ve said that before.”

In November 2022, the board reinstated Iger as CEO after removing Chapek from the position.

Peltz Accuses Disney Board Of Not Holding Iger Accountable

In his campaigns, Peltz also claimed that Disney’s directors were guilty of overlooking Iger’s performance in key areas. In Trian’s white paper, they recommended that the board develop a ‘clear’ streaming strategy.

This streaming strategy should in their words, set “tangible goals that will achieve Netflix-like margins of 15%-20% by 2027.” They also advised Disney to take more creative risks to achieve better returns on its streaming content.

Peltz Raises Questions On Disney’s ‘Woke’ Movies

In a recent interview with the Financial Times, Peltz questioned Disney’s “woke” Marvel movies featuring Black and female superheroes, such as “Black Panther,” which made a lot of money worldwide.

He asked, “Why do I have to have a Marvel [movie] 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?” 

Trian’s Recommendations For Disney’s Growth

Trian’s report proposed that Disney’s board look into how the studio works and its culture, including its “leadership, processes, and workflow.” They also advised prioritizing new ideas to aid Disney’s long-term growth.

At the New York Times’ DealBook Summit last fall, Iger emphasized that Disney should focus on storytelling rather than pushing specific ideas. “Creators lost sight of what their No. 1 objective needed to be. We have to entertain first. It’s not about messages,” Iger said. 

Better Stock Prices Secure Re-Elections For Current Board

In the end, most of Disney’s shareholders chose to keep the current board. Their decision is very likely to have been influenced by the upturn in Disney’s stock prices.

By the end of 2023, Disney had better control over costs, and investors seemed excited about new plans, like investing in Epic Games and launching a standalone streaming version of ESPN in 2025, announced by Iger.

Train Takes Credit For Stock Price Rise

Trian did take the credit for the improvement. They claimed that “the pressure of our proxy contest pushing Disney to perform” was responsible for the rise in stock prices. Peltz had earlier threatened a proxy fight with Disney back in January 2023.

However, by February 9, he stopped pursuing a board seat after Disney announced big changes to its operations with Iger returning as CEO.

Most Expensive Proxy Fight In U.S. History

The showdown is believed to be the most expensive proxy battle in U.S. history. Disney expected to spend around $40 million for the board battle, mainly because of its efforts to get individual investors, who own more than a third of the company’s shares, to vote.

Before the votes were counted at the meeting, Disney allowed Peltz three minutes to speak to shareholders. He repeated earlier points, saying Trian aims to help companies that may have “perhaps stumbled.” He also praised Disney for having  “some of the greatest brands in entertainment.”