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Investor Trian Files Proxy Statement to Place CEO, Former Disney CFO on House of Mouse Board Media Play News

January 18, 2024

Activist Disney investor Trian Fund Management Jan. 18 made good on its pledge to wrest some control of the the Walt Disney Company’s board of directors with the nomination of its CEO Nelson Peltz and former Disney CFO Jay Rasulo.

Nelson Peltz

Trian, which nominated the executives in a regulatory proxy statement targeting Disney shareholders, contends Disney — including its movie studio, direct-to-consumer (i.e., streaming) business and amusement business — is currently mismanaged and in need of third-party management input.

Specifically, Peltz complains Disney’s streaming business significantly lags behind what he calls “Netflix-like” operating margins from 15% to 20%.

“The company is not being run properly,” Peltz Jan. 18 told CNBC’s “Squawk on the Street“.

Trian, which owns about $3 billion in Disney stock, and its CEO have long engaged directly with Disney CEO Bob Iger and the company board. Shortly after Iger returned to the CEO position, replacing his short-lived successor Bob Chapek, Peltz aggressively sought board seats unless Disney made significant changes.

Iger shortly thereafter announced planned layoffs of 7,000 global Disney employees, among other cuts, in an effort to reduce $5 billion in operating costs.

“They promised they were going to improve things,” Peltz told CNBC. “I took them at their word. Things got worse. The stock went down. Results got worse. So, no more. I can’t continue to give them more opportunities.”

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Trian, according to its Disney-related website, RestoreTheMagic.com, contends Iger and the board are significantly less invested financially than Trian. In addition, the investor claims Disney’s return to shareholders is down 40% over the past 10 years, compared a 208% increase in the S&P 500 and 441% spike among “Disney’s self-selected media peers”.

According to the website, Trian believes the root cause of Disney’s underperformance is a board that is too closely connected to a long-tenured CEO (Iger) and too disconnected from shareholders’ interests.

Specifically, Trian says Iger has sold more than $1 billion in company stock since 2005, and currently only owns around $19 million of Disney stock. At the same time, Disney’s non-management directors allegedly own around $14 million in collective Disney stock.

“Are Disney shareholders really to believe the current board is able to heal these self-inflicted wounds?” Peltz said in the proxy statement. “We respectfully believe the answer to that question is ‘no’ and we will seek the support of shareholders for meaningful change in the board’s composition.”

Disney, which has formally rejected Trian’s board nominees, on Jan. 16 nominated a slate of 12 board members, who include 12 board nominees, which include Mark Parker, executive chairman of Nike, Mary Barrra, CEO of General Motors, and Iger — who has announced he is retiring in 2026.

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Erik Gruenwedel

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