Activist Investor Seeks Spot on Disney's Board To Help With "Poor Corporate Governance"

The Walt Disney Company Board of Directors is about to go through a pretty big change.

Current Disney Chair, Susan Arnold, will step down due to a preset term limit after serving 15 years in her position. Disney’s Board recently announced that Executive Chairman of NIKE, Inc., Mark Parker, would serve as her replacement. But, he wasn’t the only person pining for the role. Activist investor Nelson Peltz of the Trian Group is still fighting for a seat on Disney’s Board — here’s what we know.

Disney just named Mark Parker the new Chairman of the Board, but the company is still facing pushback from Trian Fund Management’s Nelson Peltz. Peltz has been seeking a seat on Disney’s board, sharing with CNBC that “the company has eroded shareholder value in recent years.”

“Fox hurt this company. Fox took the dividend away. Fox turned what was once a pristine balance sheet into a mess,” continued Peltz. And now, Trian has officially filed a preliminary proxy statement that seeks to put Peltz on Disney’s board.

The activist investor argued he deserved a position on the board due to his “prior experience turning around companies to improve performance and increase long-term shareholder value,” per US News. He has previously won proxy battles with DuPont and Procter & Gamble.

©Trian Partners

According to Peltz, Disney has been wrought with “poor corporate governance on Disney’s part, including failed succession planning” and “over-the-top compensation practices.” In the proxy filing, Peltz listed multiple meetings with Disney board members, including then-CEO Bob Chapek.

Disney was reportedly open to making Peltz a board observer at one point, which would allow him to sit in on meetings and offer advice without giving him voting privileges.

But, that seems to have changed since Iger took over as CEO once again. Trian and Peltz called Disney’s streaming strategy out in the recent filing, indicating it was “struggling with profitability, despite reaching similar revenues as Netflix and having a significant IP advantage.” Disney owns the IP available on its streaming service, while other platforms like Netflix do not.

What’s the solution? Peltz seems to think buying Hulu outright is the answer. “They must buy Hulu, that unfortunately means the company will have a debt load going forward for several years.” Disney currently owns two-thirds of Hulu.

Of course, this comes shortly after Disney’s announcement that Parker would become the new chairman of the board. In the same announcement, Disney responded to Trian’s push and said the following:

“The Walt Disney Company remains open to constructive engagement and ideas that help drive shareholder value. While senior leadership of The Walt Disney Company and its Board of Directors have engaged with Mr. Peltz numerous times over the last few months, the Board does not endorse the Trian Group nominee, and recommends that shareholders not support its nominee, and instead vote FOR all the Company’s nominees (noted above).”

Disney shareholders were given the choice via vote, and ultimately Parker came out on top.

We’ll continue to keep an eye out for updates regarding Trian and Peltz’s proxy filing and how that might affect The Walt Disney Company. Stay tuned to AllEars for more!