Disney shareholders on Wednesday reelected the media conglomerate’s full board, preliminary results show, handing a stinging defeat to activist Nelson Peltz and former Marvel CEO Ike Perlmutter, both of whom agitated for change at one of America’s most storied companies.
The widely expected victory caps a combative months-long process and affirms the board’s decisions, from the move to bring back CEO Bob Iger to his efforts to re-invigorate the $223 billion media company.
Peltz and Trian wanted to oust two directors — Maria Elena Lagomasino and Michael Froman — citing sustained share underperformance, a failed succession process, and billions in misdirected investments.
Peltz lost to Lagomasino by a two-to-one margin, a person familiar with the matter said. Retail voters overwhelmingly supported Disney, that person added, helping to deliver Iger 94% of the prevailing vote.
Rasulo lost to Lagomasino by an even larger margin, five votes against everyone. That person characterized it as Peltz’s largest loss ever.
Turnout for the director vote stood in the mid-sixties percentage-wise, as indicated by another person familiar with the matter. In 2023, approximately 63% of Disney shareholders participated.
A second activist, Blackwells, also failed in its long-shot bid to secure board seats.
“I want to thank our shareholders for their trust and confidence in our Board and management. With the distracting proxy contest now behind us, we’re eager to focus 100% of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers,” stated Iger in a release.
Disney marshaled significant resources in the proxy fight, enlisting support from its founding family, Star Wars creator George Lucas, JP Morgan CEO Jamie Dimon, and Laurene Powell Jobs, the widow of Pixar and Apple CEO Steve Jobs.
Although Peltz will not join the Disney board, he and his firm have asserted some credit for the rebound in the company’s shares.
“While disappointed with the proxy contest outcome, Trian appreciates the support and dialogue with Disney stakeholders,” stated Trian.
The company expended approximately $40 million in the battle against Peltz, with Disney’s top shareholders, Vanguard and Blackrock, siding with management just before the meeting.
Despite garnering support from proxy advisors and smaller institutional investors, the activists failed to persuade enough shareholders of a viable plan to address Disney’s challenges.
Although Peltz’s bid gained traction, former Disney CFO Jay Rasulo, also nominated by Trian, didn’t resonate as strongly.
While unsuccessful in securing board seats, Blackwells expressed satisfaction in preventing Peltz’s election.
“Blackwells’ primary objective was achieved – keeping Nelson Peltz out of the Disney Boardroom,” they stated, adding that any of their candidates could have contributed to the company’s advancement.
Peltz, known for successful campaigns at PepsiCo, P&G, and Wendy’s, controls a $3.98 billion stake in Disney, mostly owned by Perlmutter.
With Disney shares up nearly 50% since Peltz’s campaign began, Trian and Perlmutter gained despite their board defeat. Peltz bears a portion of the estimated $25 million spent on the fight, a small sum compared to the gains in his controlled stake.
As Disney moves past the Peltz battle, it confronts unprecedented challenges. ESPN’s subscriber decline over the years raises doubts about its readiness to compete with streaming newcomers.
Disney’s streaming business, investing billions to gain subscribers, operates at a loss in its pursuit to catch up with Netflix.
Significantly, the company seeks a successor to Iger for the second time in five years. Trian spotlighted Disney’s mishandled succession, citing the ousting of Iger’s hand-picked replacement, Bob Chapek, just two years into his tenure.
“Thank you for your trust and confidence in the Disney project management, and the ambitious strategy we’re implementing across our businesses to build for the future,” Iger remarked post-preliminary vote.
“Now that this distracting proxy contest is behind us, we’re here to focus 100% of our attention on our most important priorities, growth and value creation for our shareholders and creative excellence for our consumers. Thank you again for your support and for your continued investment in this.”
Evidence suggests major proxy advisors concurred with Peltz’s argument regarding the board’s inadequacy for a second search process.
Shareholder advisory firms Glass Lewis and ISS noted the succession issues in their recommendations to investors.
Glass Lewis sided with Disney, noting Iger’s return and this year’s board nominations as opportunities for a more credible succession plan and key initiatives targeting acknowledged weaknesses.
Disney garnered investor support in February after announcing exclusive streaming rights to Taylor Swift’s Eras Tour concert film, a $1.5 billion investment in Epic Games, and a flagship ESPN streaming service during its earnings call.
Peltz criticized the slew of announcements as a “spaghetti-against-the-wall” plan meant to “distract shareholders.”
Disney shares have surged 23% since the fiscal first-quarter earnings report in early February.
