Main menu

Pages

Walt Disney appoints new chair as he prepares for proxy battle with Nelson Peltz

featured image

Activist investor Nelson Peltz will try to fight his way onto Walt Disney’s board after the company declined to name him as director, setting the stage for one of the biggest U.S. proxy fights in years.

Peltz is planning to take his bid for a board seat directly to investors, according to people briefed on his plans, pitting him against Bob Iger just months after returning for a second stint as chief executive of the entertainment group. expanding.

Disney said on Wednesday it is opposed to giving a board seat to Peltz, head of New York-based Trian Partners, which owns a $900 million stake in the company. In an apparent attempt to get ahead of the impending struggle, Disney has named Nike veteran Mark Parker as its next president.

Parker will succeed Susan Arnold, whose leadership was called into question last year because of the company’s handling of former chief executive Bob Chapek in his final months in office.

Peltz’s proxy fight against Disney would be one of the biggest boardroom battles since he forced his way into the role of head of consumer products group Procter & Gamble in 2018.

The months-long proxy fight, in which both sides spent more than $100 million wooing shareholders, captivated Wall Street, with Peltz ultimately victorious by a margin of 0.002% before stepping down in 2021.

Trian released a 35-page report shortly after Disney’s announcement criticizing its M&A strategy, particularly its 2018 acquisition of 21st Century Fox, saying it showed “poor judgment”.

The activist fund also denounced cost inefficiencies in Disney’s streaming business, which it said has resulted in the company losing $11 billion to date, and called its succession planning process “broken”.

In the report, titled “Restore the Magic,” Trian laid out his vision for Disney, including calls to secure a successor to Iger within two years and a reinstatement of its dividend by 2025.

A person close to Disney criticized the Peltz plan for lacking strategy. “It is really surprising that there is criticism in [Trian’s presentation] but literally not a solution,” the person said. “Peltz has no plans.”

Disney said Arnold, the entertainment group’s first female chair, would not run for re-election as director at the company’s next annual meeting because of a 15-year term limit set by the board’s tenure rules.

His stint as president, which began in 2021 after Iger stepped down, has been marked by the challenges brought by the Covid-19 pandemic, which has crippled Disney’s theatrical and theme park businesses.

She came under scrutiny after the company renewed Chapek’s contract last summer after a bruising confrontation with the Florida governor over an education bill deemed anti-LGBT by his opponents, only to fire him in November.

Parker, executive chairman of Nike, served on Disney’s board for seven years. In a statement, Arnold said Parker “helped [Disney] effectively navigate a time of unprecedented change”.

Iger signed a two-year deal with Disney when he returned in November. In a statement, Parker said his top priority would be “identifying and grooming a successful CEO successor” and that the process “has begun.”

Disney’s stock price has dropped nearly 40% in the past year as investors began to question the entertainment group’s high spending on its streaming business.

The stock’s poor performance has caught the attention of activist investor Daniel Loeb, who successfully lobbied Disney to appoint media veteran Carolyn Everson to its board last fall.

In a statement Wednesday, Disney said its senior leadership and board have engaged with Peltz “countless times.” He said he remains “open to constructive engagement” with him but would not endorse his appointment to the board.

Parker spent 13 years at the helm of Nike, the world’s biggest sportswear maker by revenue, during a period marked by revenue growth but also controversy, including an alleged “boys club” culture and a doping scandal.

A lifelong member of the company who joined as a shoe designer in 1979, Parker became chief executive in 2006 and has overseen Nike’s expansion of online and direct sales to consumers. Total revenue more than doubled to $39.1 billion in 2019, the last full year of his tenure.

Comments