By Gary Symons
TLL Editor in Chief
Disney and CEO Bob Iger emerged as the clear winners in a proxy fight with activist investor Nelson Peltz.
The annual general meeting saw shareholders standing solidly behind Disney, its CEO and current board of directors. They voted to elect Disney’s full slate of 12 nominees, including Iger. The vote has not yet been released, but a Disney executive, Horacio Gutierrez, said Disney won the critical vote by a “subtantial” margin.
The vote ends the bitter and lasting battle between the Disney board and a group led by Peltz, his company Trian Partners, and Blackwells Capital.
In February, Disney issued a direct and very blunt appeal to shareholders asking them to support the current board, and calling the nominees backed by Peltz “unqualified” to sit on the board.
“Disney’s Board of Directors believes all of its 12 nominees are uniquely qualified to continue this important progress and create long-term shareholder value,” the board’s statement read. “The Board urges shareholders to protect their investment and the future of the Company by voting the WHITE proxy card FOR only Disney’s 12 nominees NOW and not the Trian Group or Blackwells nominees.
“The Disney Board of Directors does not endorse the Trian Group nominees, Nelson Peltz and Jay Rasulo, or the Blackwells nominees, Craig Hatkoff, Jessica Schell and Leah Solivan, and believes that they are unqualified to serve on Disney’s Board and preserve value creation for shareholders in this increasingly complex global landscape,” the board added.
While Peltz and his allies argued Disney suffered from bad management, leading to a decline in revenue from its films and its Disney+ streaming service, Disney argued that since Iger had returned as CEO, the company had shown great progress in turning the company’s fortunes around.
“The board has been laser-focused on a strategy that will drive shareholder value,” the company said. “The company has restored its cash dividend and subsequently increased the dividend payment declared for July 2024 by 50%. Disney is also targeting $3 billion in share buybacks for FY24. As shared in its first quarter earnings, the Company has also made great strides in reining in costs and is on track to meet or exceed its cost cutting target of $7.5 billion by the end of FY24.
“Disney also reaffirmed it is on track to deliver $8 billion in free cash flow, and to reach profitability in its combined DTC streaming businesses in Q4 FY24. Disney’s creative engines continue to be recognized with numerous nominations across the TV and film industry.”
As well, Disney noted it had not only restored shareholder dividends, but subsequently increased the dividends. Disney also noted its films received 20 Oscar nominations, the most of any studio, and that six of the 10 top streamed films globally were all from Disney.
That message clearly resonated with shareholders, who delivered a clear vote of confidence in the board’s continued leadership.
Iger thanked the shareholders at the end of the meeting, and also pointed to the company’s new initiative, involving a partnership and $1.5 billion investment in Epic Games.
“Young audiences are huge consumers of video games,” Iger said, adding the partnership will allow Disney to “forge even greater connections” with a young demographic.
While the vote put an end to this long proxy fight, the battle did not leave the company unscarred. Disney reportedly spent roughly $40 million in its shareholder outreach campaign, while Peltz’s campaign is estimated to have cost US$25 million, and Blackwells’ is pegged at around US$6 million.
Peltz made an unsuccessful attempt at the meeting to sway opinion, saying his battle to place new directors on the board was intended only to improve the company’s fortunes. “All we want is for Disney to get back to making great content, delighting consumers (and creating) sustainable long-term value for all of its shareholders,” Peltz said. “Regardless of the outcome of today’s vote, Trian will be watching the company’s performance.”
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