Walt Disney Co. and billionaire Nelson Peltz are preparing for a boardroom battle after the home of Mickey Mouse denied the prominent activist investor a seat on its board.
Peltz, co-founder of Trian Fund Management, asked to join Disney’s board after criticizing the company for its bad financial returns. His request was denied. Trian owns 9.4 million shares of The Walt Disney Company, valued at $900 million—roughly a 0.5 percent stake.
A presentation released by Trian (pdf) called Disney “a company in crisis” whose problems were “self-inflicted.” The Trian website mentioned poor corporate governance, “over-the-top” manager compensation, poor strategy, poor financial discipline, and failed succession planning as key issues afflicting the $176-billion entertainment company.
“We pride ourselves on not being dogmatic,” claimed Trian’s presentation. “A core Trian principle is to be a good listener, to consider both sides of an issue and support the best ideas regardless of where they originate.”
The outgoing chair of Disney’s board, Susan Arnold, called Peltz on Wednesday to offer him a role as a board observer, provided he agreed to a “standstill agreement” guaranteeing he would not increase Trian’s stake in the company. Peltz declined, the Wall Street Journal reported. Disney has since named independent director and Nike Executive Chairman Mark Parker as its next chairman.
Currently, Disney is trading at an eight-year low. Shares plummeted 39 percent in the past year, under the troubled leadership of recently ousted CEO Bob Chapek. Trian stated that it did not wish to create additional instability by replacing Bob Iger, who is now serving his second term as Disney CEO after appointing Chapek as his successor in 2020.
As chairman of Peaks and Resorts, Chapek oversaw the completion of Shanghai Disneyland in 2016 and the launch of The World of Avatar in 2017. When revenues increased by 14 percent, Chapek was tipped as successor to the well-respected Bob Iger, who became Disney’s CEO in 2005.
Iger, 71, agreed to serve as an interim CEO for a maximum of two years as the company searches for a permanent replacement. He has vowed to turn the company around, but Peltz believes more should be done.
A boardroom battle is expected that will pit Peltz, an activist investor respected for his successes at consumer companies such as Heinz, Dupont, and Procter & gamble, against Bob Iger, a Hollywood favorite. If the board can’t come to an agreement with Trian, the matter will be settled by an investor vote later this year. Disney, however, has already urged its shareholders to vote against Peltz.
“While senior leadership of The Walt Disney Company and its Board of Directors have engaged with Mr. Peltz numerous times over the last few months, the Board does not endorse the Trian Group nominee, and recommends that shareholders not support its nominee, and instead vote FOR all the Company’s nominees,” it said.
Reuters contributed to this report.