Disney shareholders celebrated a major victory this week as they reelected the media conglomerate’s full board. The preliminary results delivered a stinging defeat to activist Nelson Peltz and former Marvel CEO Ike Perlmutter, who had been pushing for changes within the company. The board’s decisions, including bringing back CEO Bob Iger and efforts to reinvigorate the media giant, were affirmed by this re-election.
Activists’ Failed Attempts
Nelson Peltz and Trian Partners had sought to oust two directors, Maria Elena Lagomasino and Michael Froman, due to sustained share underperformance, a failed succession process, and misdirected investments. Despite their efforts, Peltz lost to Lagomasino by a wide margin, with retail voters overwhelmingly supporting Disney and delivering Iger 94% of the overall vote. Former Disney CFO Jay Rasulo, another nominee from Trian, also suffered a significant defeat to Lagomasino.
The intense proxy fight saw Disney deploying significant resources, garnering support from various influential figures including Star Wars creator George Lucas and JP Morgan CEO Jamie Dimon. The company also spent an estimated $40 million to defeat Peltz’s campaign. The shareholders ultimately failed to be convinced by the activists’ proposed changes, with the largest shareholders Vanguard and BlackRock backing Disney management in the final days before the board election.
Outcome and Impact
While Peltz and Perlmutter control a substantial stake in Disney, the board’s victory signified a defeat for the activists despite the company’s shares rising nearly 50% since the campaign began. Disney still faces challenges such as the decline of ESPN subscribers and competition in the streaming industry. The search for a successor to CEO Bob Iger, for the second time in five years, poses another significant hurdle for the company.
Major proxy advisors echoed Peltz’s concerns about the board’s ability to handle another search for a successor. Shareholder advisory firms Glass Lewis and ISS highlighted the succession issues and recommended changes within the company. Despite facing these challenges, Disney made significant announcements during its earnings call, further solidifying its position in the market and potentially addressing some of the operational and financial weaknesses that had been raised.
Disney’s board reelection and the defeat of activist campaigns underscore the company’s resilience and the shareholders’ trust in the current leadership. While challenges lie ahead, including the search for a new CEO and competition in the streaming space, Disney remains determined to focus on growth, value creation, and creative excellence for its consumers. The battle with activists may be over, but the true test for Disney is yet to come.