D-Day for Disney activist investor fight: Disney vs. Peltz

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Attention will be on Disney later Wednesday when it holds its annual shareholder meeting and reveals how the battles it has been having with activist investors have shaken out.

Investors and observers alike are looking to see whether the Bob Iger-run entertainment giant, Trian Group or Blackwells Capital will come out victorious in the highly-scrutinized proxy fights.

Shareholders have already started turning in their votes regarding the future of Disney’s board, and some have publicized who they are choosing to back.

For example, the New York City Retirement Systems is putting its 2.6 million shares behind the entertainment giant.

“We’re long-term investors and our shares have performed well at Disney over the long-term of Bob Iger’s leadership,” New York City Comptroller Brad Lander told “The Claman Countdown” on Monday of the decision. “We are cautiously optimistic about the strategic transformation that he’s proposing, and we just don’t believe Nelson Peltz’s activist philosophy is aligned with our long-term shareholder interest in the company’s success.”

Another big pension fund, CalPERS, said it went with Trian and Nelson Peltz.

Trian and Peltz officially kicked off their latest proxy fight with Disney late last year. That was followed in January by investment firm Blackwells Capital launching one of its own.

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Trian has claimed Disney “has lost its way in the past decade, making strategic and operational missteps that have results in deteriorating financial performance and poor absolute and relative stock returns, costing shareholders billions.”

It directed blame at Disney’s board, alleging it “lacks focus, and accountability and has consistently failed to fulfill its essential duties.” In response, it has put forward Peltz and former Disney CFO Jay Rasulo as its board nominees, arguing they should take the seats of Michael Froman and Maria Lagomasino. 

NELSON PELTZ: DISNEY’S BOARD HAS ‘SELF-INFLICTED’ WOUNDS

Trian has accused the board of “questionable strategic and capital allocation decisions, poor executive compensation alignment and suboptimal succession planning.” It has also flagged things like box office performance and linear TV. 

Peltz is connected to one of the most prominent celebrity families; his daughter, actress Nicola Peltz, is married to Brooklyn Beckham, the son of David and Victoria Beckham. 

Blackwells has also argued Disney shareholders could get more value.

In a recent presentation, the firm argued Disney has “fall[en] behind in the areas of content, media, technology and governance best practices,” among others.

It proposed its three board nominees could fill the gaps it perceives if they get elected as additions to the board. They are Jessica Schell, Craig Hatkoff and Leah Solivan.

Blackwells also suggested Disney “could be worth more as two or three distinct entities.” It has offered the possible idea of spinning Disney’s massive real estate portfolio off into an REIT or “creating an IPCo/OpCo/PropCo structure.”

Last week, the firm slapped Disney with a lawsuit, raising questions about disclosures pertaining to ValueAct Capital, Reuters reported. Disney has refuted them as “baseless,” according to the outlet. 

Disney has pushed back on both the nominees proposed by the activist investors and their arguments. 

“We have aggressively executed our key strategic priorities to make Disney’s businesses more efficient and effective, reinvigorated our creative engines, and sharpened our focus on our greatest brand and franchise assets,” the company said on a website it created.

It has pointed to things like its recent dividend actions and the $7.5 billion in annual cost-savings it is working to achieve. It has also touted its work related to its streaming services, ESPN and parks.

The entertainment giant has questioned the qualifications of the activist investor-nominated board candidates for the job and claimed they could “disrupt” its progress.

Disney’s slate, which it argued is best suited, includes Mary Barra, Safra Catz, Amy Chang, Jeremy Carroch, Carolyn Everson, James Gorman, Calvin McDonald, Mark Park, Derica Rice, Iger, Froman and Lagomasino.

Disney and the Central Florida Tourism Oversight District that runs Disney World’s special tax district last week settled a lawsuit that arose out of a feud between the company and Gov. Ron DeSantis.

A slew of prominent individuals and firms have publicly made clear where they stand, particularly in the proxy fight between Disney and Trian.

Disney has gotten expressions of support from JPMorgan Chase CEO Jamie Dimon, Lucasfilm founder George Lucas, former Disney CEO Michael Eisner, Emerson Collective founder Laurene Powell Jobs and ValueAct Capital. Disney family members have also stood by the company and its nominees.

Meanwhile, 13 business executives urged Disney’s board to “work with [Peltz] for the benefit of all shareholders.” They all had past experience with Peltz and Trian through their various companies.

Proxy voting advisory firm Glass Lewis said shareholders should side with Disney in the board vote, while Egan-Jones issued a recommendation to vote in favor of Peltz and Rasulo. Institutional Shareholder Services offered an endorsement of Peltz.

In the final days before the meeting, Disney and the activist investors alike were urging eligible shareholders on their respective websites dedicated to the proxy fights to cast their votes.

Shareholders of record as of Feb. 5 have a say in the board’s makeup. The company reported having about 768,000 common shareholders of record at the end of September.

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Proceedings are expected to kick off at 10 a.m. Pacific.

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