Activist investor Nelson Peltz published 133 pages lots of ideas on how to improve Disneybut it might take a little luck to convince shareholders at the company’s annual meeting next month that he and an ally should be added to the board.
Peltz’s Trian Fund Management LP is one of two activist investors seeking seats on Disney’s board, but with a $3 billion stake under Trian’s control and a louder voice, Peltz has been a thorn in Disney’s side for months it’s about doing your job latest Proxy fight against the company. The other activist hedge fund vie for representation on the board Disney is owned by Blackwells Capital, which owns shares worth around $5 million.
In a lengthy memo released Monday, Peltz’s hedge fund took aim at CEO Bob Iger and his board members, laying out a plan that Trian described as “Restore the magic“, which included cutting sequels and reclaiming the lead role in animated films.
Disney did not immediately respond AssetsRequest for comments.
Peltz blamed Iger, who was celebrated by shareholders, as he returned When he got the top job in November 2022, he was not motivated to improve the company’s stock performance because he only owned about $20 million worth of Disney stock compared to the billions in Disney stock Trian controls. Disney pointed this out in one refutation According to Peltz’s previous attacks, he made $150 million by selling about a third of his Disney shares in early 2023.
Disney, in turn, said Peltz didn’t have that correct experience Being on the Disney board because he hasn’t worked in the media or technology industry. The company has recommended that investors re-elect Disney’s board nominees, including new directors James Gorman, chairman of Morgan Stanely, and Jeremy Darroch, former CEO of British media company Sky.
The activist investor also accused Iger of appointing many of his friends and close contacts to the board. The board is not entirely focused on the company, the memo said, because several members serve as CEOs or directors at other companies, including as chairman Mark Parkerwho also serves as CEO of Nike.
Peltz’s big ideas
As for the company’s direction, Peltz and Trian maintained that Disney needed to regain the edge it had recently lost Universal in animated films, the memo says. Universal animated films like “Minions: The Rise of Gru” and “The Super Mario Bros. Movie” broke records last year, while Disney couldn’t keep up, Peltz’s memo said.
“While Disney blames the pandemic for poor film quality and results, its competitors managed to release some of the highest-grossing animated films of all time last year,” the memo said.
Instead of looking for new intellectual property to build on, Disney has focused too much on sequels and spin-offs, which “suggests a sputtering creative engine.”
“Sequels are less risky film projects in production, but do not provide the same long-term benefits as new intellectual property,” the memo said.
Trian and Peltz added that the board should conduct a review of studio operations and culture to correct what they say is a “spend what you need” mentality at Disney that often leads to budget overruns and a lack of financial discipline leads.
But despite Peltz’s long list of suggestions and his insistence that he can fix Disney, he faces an uphill battle to get on the board, especially given the company’s recent gains last month.
The company exceed analysts’ expectations on earnings per share and said full-year earnings per share would beat last year’s results by 20%. It also announced a $3 billion share buyback and a 50% dividend increase to attract investors ahead of next month’s shareholder meeting.
The current Iger and Disney board also has strong supporters among the family members and heirs of company founders Walt and Roy Disney. Last week, Disney descendants, including Iger critic Abigail Disney, published two separate letters against the nominations of Peltz and fellow activist firm Blackwells.
“Disney stories are full of heroes and villains. “We know who the villains are in this story, and we know that they cannot be trusted to protect this company’s rich legacy or guide its bright future,” one of the letters said.