Disney Said To Be Edging Past Nelson Peltz In Proxy Fight Ahead Of Annual Meeting

Jill Goldsmith
·4 min read

Disney may have nudged Nelson Peltz farther from its board as giant BlackRock is said to be backing the company’s slate of directors. The firm is Disney’s second-largest shareholder at about 4.2%.

The news, first reported in the Wall Street Journal, followed T. Rowe Price, an 0.5% owner, coming out in support of CEO Bob Iger and Disney as shareholders head into the last day of voting ahead of the annual meeting set for Wednesday at 10 am PT/1 pm ET. The board has over the past three months been the focus of the most expensive proxy fight on record pitting directors and CEO Bob Iger against Peltz, the billionaire activist investor who has pounded Disney on strategy, stock price and, mainly, poor succession planning.

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The deadline for voting is 11:59 tonight. The WSJ said that over half of all shares had been voted so far, so things could still change.

Disney and BlackRock declined to comment.

Peltz’ Trian Partners is voting about 1.5% of Disney, his shares and those of ally Ike Perlmutter. He wants board seats for himself and former Disney executive Jay Rasulo. To that end, he has asked shareholders to unseat Disney nominees Maria Elena Lagomasino and Michael Froman. There are 12 director seats. The nominees with the most votes win.

Trian and Disney have been hurling mud at each other since early this year, bombarding stockholders with frequent and elaborate missives, videos and charts. Disney has racked up a bill of at least $40 million in outreach, including telephone calls to individual retail shareholders. The company has a larger than average retail shareholder base.

Trian has spent about $25 million in its push. Battle lines have been forming. BlackRock is a big get. There’s been no word regarding Disney’s other top two shareholders, Vanguard and State Street.

The scorecard so far: In the Disney camp — proxy advisory film Glass Lewis, shareholders New York City Retirement Systems and ValueAct, as well as Walt Disney family members, former CEO Michael Eisner, Laurene Powell Jobs, George Lucas and actor Josh Gadd (voice of Olaf in Frozen).

In the Peltz camp – ISS, the largest proxy advisory firm recommended a vote for Peltz (not Rasulo) in the biggest blow Disney’s faced in the fight. A much smaller advisor, Egan-Jones, recommended votes for both Trian nominess, as did investors Neuberger Berman and CalPERS (California Public Retirement Systems).

It’s been a three-ring circus with another institutional investor Blackwells Capital fielding three of its own nominees to the Disney board. It’s also spent millions to promote them but without getting much traction.

A SEC rule requiring what’s called a universal proxy card has made shareholder board challenges easier. Since September of 2022, proxy cards must include the names of all nominated director candidates proposed by any party, and shareholders voting by proxy can choose any combination of nominees. Previously, only shareholders voting in person at annual meetings could mix and match.

“You can tell it’s going to be close because they [Disney] are really scraping and communicating and trying to get every last vote,” said Michael Levin of The Activist Investor, which advocates for shareholders. It apparently wasn’t close enough for Disney to offer Peltz a seat in a last-minute deal, as sometimes happens in proxy fights and some anticipated might here.

“There are towering egos involved,” Levin says. By now, “This has become a little bit less about the direction of the business, and more about who is going to prevail.”

“The debate about what does he [Peltz] know about the media business and how is he going to fix streaming is nice, but Disney has 300 people in the company who have ideas about that. The kind of thing Peltz [would] contribute is pure governance. The core problem with the board is that they are completely loyal to Bob Iger … So you have 11 people consistently unable to push back on him, to question him. Nelson Peltz [wouldn’t] have that problem.”

That’s how Peltz has in part described the Disney board. The company disagrees with that characterization.

From a Wall Street perspective, the outcome won’t alter Disney’s investment thesis much.

“I don’t think my opinion on Disney would change. I don’t think [Peltz has] had any constructive new comments, or thoughts, that are earth shattering. I think he’d be a pain in the board room and I do agree with what Iger has said, that it’s a distraction he doesn’t need,” says one analyst. “The difference in Nelson Peltz being on the board and not being on the board will be about how much cr*p is he going to give Iger.”

A director Peltz “could mean a higher likelihood that Iger truly does retire in 2026,” he added. But Peltz or no Peltz, there’s pressure to get succession right this time.

If Peltz loses, “there will also be the thought that if the stock goes down, he’ll be back.”

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