How Likely Is a Board Shake-Up at Disney?

You probably know by now that an activist investor named Nelson Peltz is critizing the board of The Walt Disney Company, and asking shareholders to give him a seat on the board.

You probably ALSO know that Disney is urging stockholders to vote for its slate of directors, and oppose Peltz’s request.

We’ve certainly had a shake-up at Disney over the past few months, as CEO Bob Chapek was fired and replaced by his predecessor, Bob Iger. Disney stock was trading at a high of $197.16 on March 12, 2021. Nearly two years later, it’s value is hovering right around $100.

Shareholders are disastisfied with that performance, and that is what Peltz is trying to capitalize on. Peltz argues that Disney’s executives are paid “over-the-top compensation.” He says that the company has failed in establishing a leadership succession. He claims that members of Disney’s board do not own large amounts of the stock — and therefore do not suffer financially when the company’s stock loses value. And, he says, the company’s board is not listening to input from its shareholders.

Last week, Peltz identified the specific board member he wants to replace on Disney’s board of directors — Michael B.G. Froman, an executive at Mastercard, who previously worked for Citigroup and in the Clinton White House.

Disney does not support the moves being made by Peltz to win a seat on the Walt Disney Company Board of Directors. The company mailed a letter to shareholders urging them NOT to vote according to the instructions being provided to them by Nelson Peltz and his company, Trian Partners.

An updated SEC filing from The Walt Disney Company says the company has worked to ensure that the Board has the “right combination of experience, skills and perspectives to guide Disney through a period of unprecedented change in the media business.”

Disney also reminded shareholders that Mark Parker, the executive chairman of Nike, is poised to become the chairman of the board of directors, and will lead a succession committee that will choose Disney’s next CEO, when Bob Iger retires for a second time.

So, how likely is a board shake-up? How likely is it that Peltz’s bid could be successful? We won’t know until Disney’s annual shareholder meeting in March. But, we can look at some other cases to see what happened.

First, Peltz HAS been successful as an activist investor before, but he has failed before, as well.

In 2017, Peltz tried to win a seat on the board of directors at Procter & Gamble, and though it was initially said that he lost in a very close contest, after a revision of the votes, it was revealed that Peltz had indeed won the proxy battle, and he was appointed to the board in 2018.

However, in 2015, Peltz was unsuccessful in winning a seat on the board of DuPont.

What about other activist investors?

In February 2022, famous corporate raider Carl Icahn attempted to win seats on the board of directors of McDonald’s. Only 1% of McDonald’s shareholders voted for his bid.

In 2009, William Ackman nominated five people for the board of directors of Target. That bid was aso unsuccessful.

Smaller proxy battles do happen frequently, but there are few that happen at companies as large as The Walt Disney Company. We’ll continue to follow this story, so stay tuned to All Ears for more!

Uncovering the Chapek, Iger, and Peltz Timeline at The Walt Disney Company

What do you think about the proxy battle happening at Disney? Share your thoughts in the comments.

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