Bob Iger poses with Mickey Mouse attends Mickey’s ninetieth Spectacular at The Shrine Auditorium on October 6, 2018 in Los Angeles.
Valerie Macon | AFP | Getty Images
Disney shareholders on Wednesday reelected the media conglomerate’s full board, preliminary results show, handing a stinging defeat to activist Nelson Peltz and former Marvel CEO Ike Perlmutter, each of whom agitated for change at considered one of America’s most storied corporations.
The widely expected victory caps a combative months-long process and affirms the board’s decisions, from the move to bring back CEO Bob Iger to his efforts to re-invigorate the $223 billion media company. Peltz and Trian desired to oust two directors — Maria Elena Lagomasino and Michael Froman — citing sustained share underperformance, a failed succession process, and billions in misdirected investments.
Peltz lost to Lagomasino by a two-to-one margin, an individual aware of the matter said. Retail voters overwhelmingly supported Disney, that person added, helping to deliver Iger 94% of the general vote. Rasulo lost to Lagomasino by an excellent larger margin, five votes against for each one for. That person characterised it as Peltz’s largest loss ever.
Percentage-wise, turnout for the director vote was within the mid-sixties, one other person aware of the matter said. In 2023, around 63% of Disney shareholders voted.
A second activist, Blackwells, also did not win board seats in its own long-shot bid.
“IÂ need to thank our shareholders for his or her trust and confidence in our Board and management. With the distracting proxy contest now behind us, we’re wanting to focus 100% of our attention on our most significant priorities: growth and value creation for our shareholders and artistic excellence for our consumers,” Iger said in a release.
Disney deployed significant resources within the proxy fight. The corporate called in support from its founding family, Star Wars creator George Lucas, JP Morgan CEO Jamie Dimon and Laurene Powell Jobs, the widow of Pixar and Apple CEO Steve Jobs.
While Peltz is not going to find yourself on the Disney board, he and his firm have claimed some credit for the rebound in the corporate’s shares.
“While we’re disillusioned with the consequence of this proxy contest, Trian greatly appreciates the entire support and dialogue we have now had with Disney stakeholders. We’re happy with the impact we have now had in refocusing this Company on value creation and good governance,” Trian said in a press release.
The corporate also spent an estimated $40 million fighting off Peltz. The total-court press worked. Disney’s two largest shareholders, Vanguard and Blackrock, decided to back management in the ultimate days before Wednesday’s meeting.
Ultimately, the activists did not persuade enough retail or institutional shareholders that he had a meaningful plan to repair the House of Mouse. While Peltz’s candidacy picked up meaningful support from proxy advisors and smaller institutional investors, shareholders were less compelled by former Disney CFO Jay Rasulo, whom Trian also nominated to the board.
Though its selections didn’t win board seats, Blackwells cheered the proven fact that Peltz was not elected.
“Blackwells’ primary objective was achieved – keeping Nelson Peltz out of the Disney Boardroom,” Blackwells said in a press release. “The corporate would have benefited from any considered one of our candidates for the exertions needed over the following few years to advance this iconic company, but we respect the need of the shareholders and the consequence.”
Jay Rasulo and Nelson Peltz.
Patrick T. Fallon | Bloomberg | Getty Images | Adam Jeffery | CNBC
Peltz, who dislikes being called an activist but has orchestrated successful campaigns at iconic corporations like PepsiCo, P&G and Wendy’s, controls a $3.98 billion stake in Disney, or about 2% of total shares outstanding. Most of those shares are owned by Perlmutter.
With Disney shares up nearly 50% since Peltz’s campaign first began, Trian and Perlmutter gained quite a bit despite their board defeat. Peltz is partially on the hook for an estimated $25 million spent on the fight, a small amount in comparison with the paper gains within the stake he controls.
Because it moves past the battle with Peltz, Disney still faces down unprecedented challenges. ESPN has shed subscribers for years, raising questions on whether it is ready to go toe-to-toe with streaming upstarts. Disney’s streaming business has spent billions to win subscribers and is losing money because it tries to catch as much as market leader Netflix.
Perhaps most importantly, the corporate is trying to find a successor to Iger for the second time in five years. Disney’s botched succession, where Iger’s hand-picked alternative Bob Chapek was ousted just two years into his tenure, was a key point Trian used against the corporate.
“Thanks on your trust and confidence within the Disney project management, and the ambitious strategy we’re implementing across our businesses to construct for the long run,” Iger said after the preliminary vote was reported. “Now that this distracting proxy contest is behind us, we’re here to focus 100% of our attention on our most significant priorities, growth and value creation for our shareholders and artistic excellence for our consumers. Thanks again on your support and on your continued investment on this.”
Nelson Peltz, founding partner and CEO of Trian Fund Management, speaks with CNBC’s Andrew Ross Sorkin on July 17, 2013 in Recent York.
Heidi Gutman | CNBC, NBCU Photo Bank, NBCUniversal via Getty Images
There may be evidence that major proxy advisors agreed with Peltz’s argument that the board was ill-equipped to tackle a second search process.
Shareholder advisory firms Glass Lewis and ISS each noted the succession issues of their recommendations to investors. Glass Lewis sided with Disney and asserted Iger’s return, paired with this 12 months’s nominations of Morgan Stanley Chairman James Gorman and former Sky CEO Jeremy Darroch to the board, have given the corporate “adequate opportunity to launch a more credible succession program and develop, communicate and execute on several key initiatives which appear to reasonably goal acknowledged operational and financial weaknesses at Disney.”
Investors rallied around Disney in February after the corporate made a series of major announcements durings its earnings call, including that it had obtained the exclusive streaming rights to Taylor Swift’s Eras Tour concert film, a $1.5 billion strategic investment in Epic Games in addition to a flagship ESPN streaming service.
Peltz called the slew of announcements a “spaghetti-against-the-wall” plan that was meant to “distract shareholders.”
Shares of Disney have jumped 23% since Disney’s fiscal first quarter earnings report in early February.
Disclosure: Sky News is owned by Comcast, CNBC’s parent company.
