Activist investor Nelson Peltz vows to continue proxy war against Disney after being denied board seats
Billionaire activist investor Nelson Peltz vowed to press his proxy war against Disney on Thursday — after the struggling media giant rejected his bid for multiple board seats.
The Trian Fund Management boss — whose fund holds $3 billion worth of Disney stock — wants at least three seats on the board including one for himself, according to several people familiar with the matter said.
Disney CEO Bob Iger extended an offer for Trian to meet with the company’s board but ruled out the activist shareholder’s request for seats, Trian said in a statement.
On Wednesday, Disney appointed two new directors: Morgan Stanley’s outgoing CEO James Gorman, who recently named his successor, and former Sky executive Jeremy Darroch.
The appointments “represent an improvement from the status quo,” Trian said, but they “will not, in our view, restore investor confidence or address the root cause behind the significant value destruction and missteps that this board has overseen.”
The decision to deny Peltz’s push for a board seat appeared to stem from his affiliation with former Disney executive Isaac “Ike” Perlmutter, who was forced out as Marvel CEO in 2015 after garnering a reputation for clashing with Iger during his first stint leading the company.
Perlmutter, who was chopped by Disney as part of Iger’s cost-cutting this year, had handed over more than 30 million shares to his longtime pal Peltz last month.
“Mr. Perlmutter owns 78% of the shares that Mr. Peltz claims beneficial ownership of, or more than 25 million of the 33 million shares,” Disney wrote in a statement shared with The Post.
“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.”
Following Thursday’s rejection, Trian said it “intends to take (its) case for change directly to shareholders,” signaling it will proceed to a second proxy fight and nominate director candidates when the window for nominations opens early next month.
Disney shares, which have traded near nine-year lows in recent months, were was flat Thursday at around $92. The company has a market capitalization of $169 billion.
“Investor confidence is low, key strategic questions loom, and even Disney’s CEO is acknowledging that the company’s challenges are greater than previously believed,” Trian said in the statement.
Trian, which ranks among the industry’s oldest and most respected corporate nudges, has kept a close eye on the Mouse House ever since Iger returned from retirement a year ago to run Disney again.
Early this year, Peltz aborted a board challenge to give Iger time to “right the ship.”
“Since we gave Disney the opportunity to prove it could ‘right the ship’ last February, up to our re-engagement weeks ago, shareholders lost ~$70 billion of value,” Trian wrote in its statement on Thursday.
Representatives for Trian Fund Management declined to comment beyond its press release.
Trian, co-founded by Peltz in 2005, thinks Disney shares are significantly undervalued and has been putting pressure on Iger to reverse the company’s Disney’s stock decline. On Wednesday, Iger said he plans to step aside after his contract expires next year.
Peltz — who serves as a board member at the Wendy’s Company and Proctor & Gamble — was also vocal about the media giant’s decision to bring Iger out of retirement and reinstate him as Disney’s CEO role.
Back in January, when Disney first snubbed Peltz’s request to join its board, it said Peltz “does not understand Disney’s business.”
Iger, meanwhile, has been taking steps to increase the company’s profits, including by jacking up the ticket prices at its Florida and California theme parks by as much as 10%.
Over the past 12 months, Disney has restructured the company and significantly reduced costs. It told investors it is on track to achieve about $7.5 billion in cost savings – $2 billion more than its original target.
Iger identified four areas of focus for the company. Disney said it will work to make its streaming business profitable, build ESPN into the “pre-eminent” digital sports brand, improve the performance of its film studios and “turbocharge” growth at its theme parks, through $60 billion in investment over the next decade.
At its Orlando, Fla., Disney World, the company spiked the price of yearly passes by 10% — with the most expensive Incredi-Pass now selling for $1,449, up $50.
At Disneyland in Anaheim, Calif., single-day tickets were lifted 8.9%, to $194.
Over the summer, the entertainment behemoth also raised the price of its Disney+ streaming service while cracking down on password sharing in another move to increase profits.
The move raised the monthly cost of ad-free Disney+ by $3, or roughly 27%, to almost $14.
The cost of ad-free Hulu will likewise rise $3 to almost $18 — a 20% hike that will make it more expensive than the most popular ad-free tier at Netflix.
Iger acknowledged that the price hikes are intended to steer consumers toward cheaper ad-supported versions of these services, whose subscription prices are not changing.
With Post wires
