As anticipated, billionaire investor Nelson Peltz’s Trian Fund Management firm announced plans Thursday to nominate Peltz and former Disney chief financial officer James Rasulo for seats on the Walt Disney Co. Board of Directors as part of a continuing proxy battle.
The nominations will be presented during Disney’s annual shareholder meeting next year.
“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, and peers and competitors continue to outperform,” Peltz said in a statement Thursday.
“In our view, Disney’s Board has failed to fulfill its essential responsibilities — overseeing the development of an effective strategy, planning for orderly succession, aligning executive pay with performance, and ensuring accountability for operational execution. Shareholder-led board refreshment with focused and aligned directors who are accountable to the owners of the company is long overdue.”
Responding to the announcement, Disney issued a statement defending the work of the board.
“Disney has an experienced, diverse, and highly qualified Board that is focused on the long-term performance of the company, strategic growth initiatives including the ongoing transformation of its businesses, the succession planning process, and increasing shareholder value,” according to the Burbank-based company.
“The Governance and Nominating Committee, which evaluates director nominations, will review the proposed Trian nominees and provide a recommendation to the Board as part of its governance process.
“The company expects to file preliminary materials with respect to the 2024 Annual Meeting of Shareholders with the Securities and Exchange Commission, which will include the board’s recommended slate of director nominees.”
Peltz had waged a proxy fight against Disney earlier this year in hopes of landing a seat on the Disney Board of Directors, but he dropped the effort in February when CEO Bob Iger announced a massive restructuring plan that included 7,000 layoffs and $5.5 billion in cost cuts.
In late November, however, Trian announced it was renewing the battle, expressing dissatisfaction with the company’s direction. The company announced then that it planned to “take our case for change directly to shareholders.”
Trian officials contended that, since February, Disney shareholders have lost about $70 billion in value. Disney at that time also defended its performance, saying, “Over the past 12 months, we restructured the company to restore creativity to the center of all our businesses as we significantly reduce costs and drive efficiencies, and we are on track to achieve about $7.5 billion in cost savings — $2 billion more than our original target.”
The company summarized its key business strategies and added, “With one of the strongest balance sheets in the media sector, Disney expects free cash flow to approach pre-COVID levels in fiscal 2024, and the Board and management are steadfast in our commitment to ensuring The Walt Disney Company’s long-term success for the benefit of all our shareholders.”
Trian’s renewal of the proxy battle came one day after Disney announced the addition of two new members to its Board of Directors — Morgan Stanley CEO James Gorman and former Sky CEO Jeremy Darroch. Current board member Francis A. deSouza plans to leave the board.
According to Trian, the company had discussions with Iger, but Disney rejected a request to give Peltz a seat on the board.
The company will now take Peltz’s nomination for a board seat directly to shareholders next year. The company will also nominate Rasulo, who worked for Disney for three decades and was chief financial officer from 2010 to 2015.
“The Disney I know and love has lost its way,” Rasulo said in a statement. “As independent voices in the boardroom, Nelson and I are confident that the combination of my decades of experience at Disney, Nelson’s significant boardroom skills and history of driving positive strategic change, and our combined consumer brands expertise and financial acumen, will be additive to the Disney Board. With a shareholder mandate, Nelson and I look forward to helping the board and management reorient the company towards delighting its consumers again and driving significant value for its owners.”
Disney officials have said there is an ulterior motive behind the proxy fight, noting Peltz’s ties with former Marvel Entertainment chairman Isaac Perlmutter, who was fired by Disney in March.
“Mr. Peltz, in partnership with Isaac Perlmutter, a former Disney executive, intends to take its case to shareholders,” according to Disney’s statement in November. “Mr. Perlmutter owns 78% of the shares that Mr. Peltz claims beneficial ownership of, or more than 25 million of the 33 million shares. This dynamic is relevant to assessing Mr. Peltz and any other nominees he may put forth as directors, as Mr. Perlmutter was terminated from his employment by Disney earlier this year and has voiced his longstanding personal agenda against Disney’s CEO, Robert A. Iger, which may be different than that of all other shareholders.
“The Disney Board will recommend to shareholders its slate of director nominees in the company’s proxy statement to be filed with the Securities and Exchange Commission and distributed to all shareholders eligible to vote at the annual meeting.”