NATIONAL NEWS

The battle over Disney’s future is about to be decided in a high-stakes board vote

Apr 2, 2024, 10:23 AM

The Disney store in the Times Square neighborhood of New York, on March 29. A bitter fight over the...

The Disney store in the Times Square neighborhood of New York, on March 29. A bitter fight over the future of Disney is set to be decided this week. Mandatory Credit: Jeenah Moon/Bloomberg/Getty Images via CNN Newsource

At issue is Disney’s (DIS) stock price, which has risen nearly 50% over the last six months but has still failed to placate the desire of some investors, who are seeking a higher return. Should activist investors secure a seat on the company’s board, they hope to shake up the Magic Kingdom and its sprawling empire, which stretches from animation to streaming services to theme parks.

Two competing slates of board seats are now up for a vote against Disney’s. One is led by Trian Fund Management, which has nominated its 81-year-old founder Nelson Peltz, the renowned billionaire corporate raider, and Jay Rasulo, a former Disney chief financial officer. And another smaller challenge comes from Blackwells Capital, which is seeking three seats.

The real challenge, though, comes from Peltz, whose alliance with former Marvel chief Ike Perlmutter could spell real change at Disney, should they be successful.

Peltz has criticized Disney’s recent theatrical flops and said the company should reach “Netflix-like margins” with its Disney+ streaming service, among other issues. The activist investor and his Trian fund want to align pay with performance for key executives, restore Disney’s box office dominance and expand the company’s profit margin. He also wants to ensure CEO Bob Iger, famous for staying on for longer than expected, really steps down in 2026 at the end of his contract.

But the plan doesn’t differ much from what Iger and team are already doing, and exactly how Peltz and Rasulo would fix things isn’t clear, analysts say.

“I don’t think [Peltz has] offered a turnaround plan that would be something that would get people saying, yeah, we need to get Peltz in there and change things,” Barton Crockett, senior research analyst at Rosenblatt Securities, told CNN.

What’s the fight about?

In recent years, Disney has struggled mightily with a surprising number of box office flops, declining viewership on its linear television networks, including ESPN and ABC, along with massive losses as it builds its streaming business to compete with the likes of Netflix.

Peltz says he is looking for a turnaround.

“[D]espite its many advantages, Disney has lost its way. Disney fell from its #1 position at the box office, was late to enter the streaming business and doubled down on linear TV at the wrong time,” Trian wrote in a letter to Disney shareholders this month.

What will happen on Wednesday?

At 1 pm ET, Disney will hold its annual shareholder meeting, during which shareholders will submit their votes for “slates” of board member positions, including those from Trian and Blackwells. The results of the vote, which is already underway, will then be revealed.

If Peltz is successful, he and Rasulo could gain up to two seats on the board, displacing Disney’s picks. The pair could then influence the company’s direction, and, some analysts believe, could hasten an early departure for Iger, who returned to the leadership role in 2022 after his hand-picked successor, Bob Chapek, was ousted.

Peltz — who has no entertainment experience but has successfully waged such proxy battles in the past — has said in interviews he wants to work with the current leadership to shake up the media giant.

“We want to make sure this company finally performs. It’s been mistreated for a very long time and that needs to change,” Peltz said in a video on Trian’s website for the proxy battle.

How is Disney fighting back?

Typically, shareholder meetings and these votes are staid affairs that barely garner significant attention from the public.

But Disney is taking the threat seriously. More than $60 million has been poured into the boardroom fight, most of it from Disney, which is fighting to keep Iger and its board firmly in place.

Disney and its supporters say that turnaround is already happening under Iger and that the Trian proxy battle is due in part to a personal grudge after Perlmutter was ousted from the company last year.

But it has a unique challenge persuading shareholders: Unlike other publicly traded companies, many of its investors are so-called “retail investors” — everyday individuals who invest in companies.

More than 35% of Disney’s shares are held by these individuals, who could seriously sway the vote. So Disney has been treating the campaign like a political one, launching a campaign website, taking out Google search ads, and advertising on popular podcasts like “Smartless.” It’s even leaning on some of its best-known animated characters.

“They’ve really pulled out all the stops in responding to Nelson Peltz and the other activists, and dismissing and attacking them on multiple levels, even going to the place of pulling out Disney intellectual property and calling Peltz a ‘Pinocchio,’” Crockett said.

“Frozen” characters Anna and Elsa have also appeared on materials mailed to shareholders, while the relatively unknown character Ludwig Von Drake hosted an animated short video explaining how shareholders can vote.

“Disney has the right strategy to drive profitable growth and value creation for shareholders and has made substantial progress against our objectives to make our business more efficient and effective, including a sharpened focus on our greatest brand and franchise assets, a continued commitment to cutting costs and a reinstatement of the dividend,” the company said in a statement last week advocating for its slate of board members.

In addition, Iger and other senior Disney executives have been traveling across the country and personally meeting with the larger and institutional shareholders, a person familiar with the matter told CNN.

Disney has also lined up some big names in support of its board, including filmmaker George Lucas, JPMorgan Chase chief Jamie Dimon, former Disney CEO Michael Eisner and billionaire philanthropist Laurene Powell Jobs. Even some members of the Disney family who have been critical of the company, like Abigail E. Disney, have spoken out against Peltz’s boardroom battle.

“Clearly, Bob Iger and the board have taken this very seriously and put out an amazing amount of material and they’ve met with investors,” Jessica Reif Ehrlich, managing director of BofA Securities, told CNN. “Nelson Peltz has gone public, so it’s very contentious, very loud, very public.”

Meanwhile, Peltz has received support in recent days from the California Public Employees Retirement System (CalPERS) and the private investment firm Neuberger Berman, dealing a blow to Disney’s efforts to stave off the board fight. The influential advisory firms Institutional Shareholder Service and Egan-Jones have also thrown their support behind Peltz for at least one seat on the board.

But while Disney isn’t leaving anything to chance, some analysts suggested that if Peltz does win a seat or two at the table, it could open the door to Iger departing the House of Mouse sooner than his planned 2026 succession.

“It’s clear that Iger doesn’t want to deal with him,” Crocket said of Peltz. “So, I guess the one thing that I would wonder about, not from an operational perspective, but from a leadership perspective, is that if Peltz wins, it might hasten the departure of Iger.”

– CNN’s Liam Reilly and Krystal Hur contributed to this report.


The-CNN-Wire™ & © 2024 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

KSL 5 TV Live

National News

FILE - A thick haze hangs over Manhattan in New York on July 20, 2021. (AP Photo/Julie Jacobson, Fi...

Associated Press

22 states sue New York state, alleging environmental fund is unconstitutional

Twenty-two states sued New York state on Thursday, contending that a new law forcing a small group of major energy producers to pay $75 billion into a fund to cover climate change damage is unconstitutional.

10 hours ago

FILE - In this photo reviewed by U.S. military officials, flags fly at half-staff at Camp Justice, ...

Associated Press

Newly unsealed documents reveal more details of prosecutors’ evidence in 9/11 attacks

Newly unsealed documents give one of the most detailed views yet of the evidence gathered on the accused 9/11 mastermind Khalid Sheikh Mohammed

10 hours ago

Protesters in front of the Utah Capitol on Feb. 5, 2025 to protest President Donald Trump and Elon ...

Bridger Beal-Cvetko, KSL.com

‘We are the real patriots’: Utahns protest Donald Trump, Elon Musk outside Capitol

Hundreds of Utahns joined nationwide protests in opposition to President Donald Trump and billionaire Elon Musk, one of Trump's top benefactors who has sought to gut federal agencies as a "special government employee."

13 hours ago

Roger Krone, chief executive officer of Scouting America, describes the design of the organization'...

Jamie Stengle, Associated Press

Boy Scouts see small uptick after rebrand to Scouting America

A historic rebrand of the Boy Scouts of America has been followed by a small uptick in young people joining what will now be called Scouting America.

19 hours ago

Palestinians walk in the destruction caused by the Israeli air and ground offensive in Jabaliya, Ga...

Lucas Lilieholm, Michael Schwartz and Helen Regan, CNN

Israel backs Trump plan and orders military to prepare for Palestinians to leave Gaza

Israeli Prime Minister Benjamin Netanyahu has backed US President Donald Trump’s proposal to “take over” Gaza.

19 hours ago

US Navy recovery teams lift the back wing section of American Airlines Flight 5342 from the Potomac...

Andy Rose, CNN

Latest radar evidence suggests Black Hawk in DC disaster was flying too high, but NTSB wants more proof

Newly released data from ground-based radar came out Tuesday suggesting an Army helicopter was flying higher than it was supposed to be when it collided with American Airlines Flight 5342 a week ago, killing all 67 people aboard both aircraft.

1 day ago

Sponsored Articles

holiday gift basket with blue tissue paper and gingerbread cookies...

Kneaders Bakery & Cafe

Holiday hacks for a stress-free season

Get more out of your time with family and loved ones over the holidays by following these tips for a stress-free season.

2 computer techs in a computer shop holding up a computer server with the "hang loose" sign...

PC Laptops

A comprehensive guide to choosing the right computer

With these tips, choosing the right computer that fits your needs and your budget will be easier than ever.

crowds of people in a German style Christmas market...

This Is The Place Heritage Park

Celebrate Christkindlmarket at This Is The Place Heritage Park!

The Christkindlmarket is an annual holiday celebration influenced by German traditions and generous giving.

Image of pretty woman walking in snowy mountains. Portrait of female wearing warm winter earmuff, r...

Lighting Design

Brighten your mood this winter with these lighting tricks

Read our lighting tips on how to brighten your mood in the winter if you are experiencing seasonal affective disorder.

A kitchen with a washer and dryer and a refrigerator...

Appliance Man

Appliance Man: a trusted name in Utah’s home appliance industry

Despite many recent closures of local appliance stores, Appliance Man remains Utah's trusted home appliance business and is here to stay.

abstract vector digital social network technology background...

Les Olson

Protecting yourself against social engineering attacks

Learn more about the common types of social engineering to protect your online or offline assets from an attack.

The battle over Disney’s future is about to be decided in a high-stakes board vote