Last year, Disney CEO Bob Iger fought off a plot by activist investing company Trian, which is run by Nelson Peltz, who had purchased lots of shares of Disney stock to try to get a place on the Walt Disney Companies board of directors. But when Disney made announcements to restore the dividend to shareholders, make billions of dollars in cost-cutting moves and try to reposition the company, Nelson Peltz called off his plot.

However, over the last year, with Disney stocks at a low, Nelson Peltz has continued to buy stocks and also recently, brought in Isaac Perlmutter, who is a former Disney executive and used to run Marvel, which has a large chunk of Disney stocks to once again make a move to get onto Disney’s board of directors. Together, Trian has over $3 billion worth of Disney stock, though it’s worth pointing out that Disney is currently worth around $168 billion.

This week, Disney announced that it had appointed James P. Gorman, Chairman and Chief Executive Officer of Morgan Stanley, and Sir Jeremy Darroch, a veteran media executive and former Group Chief Executive of Sky, as new directors.

This move then resulted in a statement by Trian, who stated that while Disney extended an offer to Trian to meet with the Board, they were informed Trian that the Board was turning down Trian’s recent request for Board representation, including Nelson Peltz. Trian said the following regarding the discussions:

“Since we gave Disney the opportunity to prove it could ‘right the ship’ last February, up to our re-engagement weeks ago, shareholders lost ~$70 billion of value. Disney’s share price has underperformed proxy peers and the broader market over every relevant period during the last decade and over the tenure of each incumbent director. Investor confidence is low, key strategic questions loom, and even Disney’s CEO is acknowledging that the Company’s challenges are greater than previously believed. While James Gorman and Sir Jeremy Darroch represent an improvement from the status quo, the addition of these directors will not, in our view, restore investor confidence or address the root cause behind the significant value destruction and missteps that this Board has overseen. Trian intends to take our case for change directly to shareholders.”

Disney has since replied to Trian stating why it turned down Peltz’s request:

The Walt Disney Company has a proven track record of delivering long-term value to our shareholders and is in the midst of a significant transformation to reinforce our position as the world’s preeminent entertainment company. Over the past twelve months, we restructured the company to restore creativity to the center of all our businesses as we significantly reduce costs and drive efficiencies, and we are on track to achieve about $7.5 billion in cost savings – $2 billion more than our original target.

Disney is moving from a period of fixing to a new era of building, as the entire media sector navigates the crosscurrents of the competitive landscape for streaming. We are executing on four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business; building ESPN into the preeminent digital sports platform; improving the output and economics of our film studios; and turbocharging growth in our Experiences business. Our extraordinary portfolio of businesses, brands and assets—and the key synergies between them—are the foundation to developing the popular franchises that will continue to drive our strategic success. With one of the strongest balance sheets in the media sector, Disney expects free cash flow to approach pre-COVID levels in fiscal 2024, and the Board and management are steadfast in our commitment to ensuring The Walt Disney Company’s long-term success for the benefit of all our shareholders.

And Disney also explained why they are also rejecting the request due to the involvement of Isaac Perlmutter, as they stated:

Mr. Peltz, in partnership with Isaac Perlmutter, a former Disney executive, intends to take its case to shareholders. Mr. Perlmutter owns 78% of the shares that Mr. Peltz claims beneficial ownership of, or more than 25 million of the 33 million shares. This dynamic is relevant to assessing Mr. Peltz and any other nominees he may put forth as directors, as Mr. Perlmutter was terminated from his employment by Disney earlier this year and has voiced his longstanding personal agenda against Disney’s CEO, Robert A. Iger, which may be different than that of all other shareholders.

Shortly after this exchange of press releases, Disney then announced it was returning the dividend to shareholders of $0.30 per share in respect of the second half of fiscal year 2023, payable January 10th, 2024, to shareholders of record at the close of business on December 11th, 2023. Which will likely help keep the investors at bay, since many haven’t had a dividend since the pandemic started.

“This has been a year of important progress for The Walt Disney Company, defined by a strategic restructuring and a renewed focus on long-term growth,” said Mark Parker, Chairman of the Board. “As Disney moves forward with its key strategic objectives, we are pleased to declare a dividend for our shareholders while we continue to invest in the company’s future and prioritize meaningful value creation.”

Without a doubt, the additional pressure of an activist investor is pushing Disney to make many more ruthless changes within the company, such as cutting staff and cost, with a push to focus on profitability.  This will have always been important to any executive or shareholder, but the internal issues within the company are what’s causing problems across the company. 

Disney has been making lots of mistakes over the last few years, with this year’s box office numbers down and audiences turning away from Disney and its other brands over many different reasons, there is a major shift going on within the company to sort these issues out and steer the company back to the heights it had before, though it’s likely going to take many years to get there.  And the creative output, both for films and shows, for theatrical, linear and streaming releases is a major problem right now for the company.

Hopefully, this situation will get resolved soon, but in the meantime, what do you think of this whole situation?

Roger Palmer

Roger has been a Disney fan since he was a kid and this interest has grown over the years. He has visited Disney Parks around the globe and has a vast collection of Disney movies and collectibles. He is the owner of What's On Disney Plus & DisKingdom. Email: Roger@WhatsOnDisneyPlus.com Twitter: Twitter.com/RogPalmerUK Facebook: Facebook.com/rogpalmeruk

View all posts