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Where Things Stand in Disney’s Proxy War

Shareholder decisions at the annual meeting will serve as a referendum on Disney’s future.

A vote for Disney’s board slate will show support for Iger’s performance as CEO since returning to lead the company in November 2022.

A vote for self-proclaimed “billionaire bully” Peltz and former Disney CFO Jay Rasulo – and for removing Disney executives Maria Elena Lagomasino and Michael Froman from the board – will be seen as a rebuke to the strategy of management.

It’s the culmination of months of struggle between Disney and Peltz, who has been waging war against Disney’s board since January of last year. Trian’s argument focuses on Disney’s stock price – down about 40% from a high of around $202 in March 2021, debt from the 21st Century Fox acquisition to $71 billion, losses from its streaming division and botched succession plan.

Disney, in turn, continued its strategy under Iger, announcing results that beat Wall Street’s expectations in February, as well as a $1.5 billion investment in Epic Games, the company behind “Fortnite,” to meet the needs of younger generations like Generation Z and Generation Alpha. .

Choosing to support “Peltz’s slate of directors would be a vote to shake things up,” Jason Schloetzer, a professor at Georgetown University’s McDonough School of Business, told Business Insider. “This means that either the strategy is correct or it needs to be refined, and the acceleration and implementation must be accelerated.”

But ahead of the shareholder meeting, it appears that Disney’s current board will get away with it, although the final decision could hinge on the vote of Vanguard, the company’s largest shareholder with about 8% of the company .

On Monday, the Wall Street Journal reported that BlackRock and T. Rowe Price, the former being Disney’s second-largest investor with about 4.2 percent of the stock, had voted in favor of Iger. Other high-profile shareholders, including investment firm ValueAct Capital, Walt and Roy Disney heirs Laurene Powell Jobs and Star Wars creator George Lucas, have also spoken out in support of the company’s leadership .

“Creating magic is not for amateurs,” Lucas said in a statement last month. “When I sold Lucasfilm a little over a decade ago, I was excited to become a shareholder in Disney because of my long-time admiration for its iconic brand and the leadership of Bob Iger.”

Still, the battle was closer than Disney would have liked, as evidenced by the $40 million it reportedly spent to appeal for votes, particularly those from retail investors, who own about 40 percent of Disney’s shares. Disney, according to the New York Times.

Disney has run extensive advertising campaigns featuring characters like Pinocchio and Donald Duck’s uncle, Ludwig Von Drake. Iger and other executives spent weeks meeting with and calling major shareholders.

“If Disney wasn’t worried about losing a seat or two on the board, they wouldn’t be so aggressive and public about pushing back,” Schloetzer said.

Trian also spent eight figures on his campaign, publishing white papers and taking to social media with satirical animations of Disney characters.

It paid off. On Monday, institutional investors Neuberger Berman and the California Public Employees’ Retirement System threw their support behind Trian, which controls about 1.8 percent of Disney stock, most of it owned by disgruntled former Marvel chairman Ike Perlmutter. And proxy advisory firm Institutional Shareholder Service recommended shareholders vote for Peltz, but not Rasulo.

Peltz waged his first war against Disney’s board in January 2023, but he cut short his bid a month later when the company agreed to cut costs and lay off 7,000 employees.

“We wish Bob, this management team and the board the best,” Peltz said on CNBC at the time. “We will watch. We will root.”

By November, he had reversed course, launching a follow-up to his initial bid for seats and continuing to struggle even after Disney’s stock rose in February.

“It’s déjà vu all over again. We saw this movie last year and we didn’t like the ending,” Peltz said at the time.

If Peltz and Rasulo get board seats, it’s unclear how much influence they’ll have. Trian said his top priorities were improving streaming margins to match those of Netflix and developing a CEO succession plan. Some have suggested he might split Disney’s assets — ABC, ESPN, the theme parks — and Peltz has said he wants to make changes to his film strategy.

“Why do I have to have an all-female Marvel?” he said in an interview with the Financial Times last month. “I have nothing against women, but why do I have to do this? Why can’t I have one-hit wonders that are both? Why do I need an all-black cast?”

In the face of it all, Iger remained outwardly confident – ​​particularly after strong first-quarter results appeared to restore his characteristic pretension.

“The last thing we need right now is to be distracted in terms of time, energy, by one or more activists who, frankly, have a completely different agenda and don’t understand our business, its assets, even the essence of the Disney brand,” he told CNBC at the time.

But if Peltz springs a surprise, Schloetzer said, “that’s where it gets interesting.”

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