After Disney rejected Nelson Peltz’s efforts to join the board (shareholders could still choose otherwise), the activist investor is lashing out at the company. Peltz said that the company is suffering from “self-inflicted wounds” and should be aiming for “Netflix-like margins.” On Thursday in a proxy statement, Peltz said that Disney needs an overhaul of both governance and strategy.
“It is unfortunate that a company as iconic as Disney and with so many challenges and opportunities has refused to seriously engage with us, its largest active shareowner, about board representation,” Peltz said in Thursday’s filing.
Jay Rasulo added, “Nelson and I are not about strategic platitudes or soft goals. As Disney Board members, we would expect to help drive Disney’s financial performance by working with other Board members to set demanding but realistic goals (to which executive compensation will be tied) and provide rigorous oversight to help ensure accountability for operational execution and capital allocation. Disney was founded and built by owners. We believe restoring the magic at Disney starts with a focused, aligned and accountable board, intensely committed to returning an ‘ownership mentality’ to the boardroom. That, and a heavy dose of best-in-class corporate governance is the medicine Disney needs to fix its ailing shareholder returns.”
While Peltz’s Trian Group had nominated both Peltz and former Disney CFO Jay Rasulo to be board members for The Walt Disney Company, Disney argued that it hadn’t done much else but criticize. In Disney’s own proxy statement, it said that efforts had been made to work with Peltz but he had not provided any solutions.
If Peltz is short on solutions as Disney says, he has no shortage on criticisms for the company. Along with looking for Disney to cut costs and raise profits, he also has criticized the succession plan. “Disney is resisting change and asking shareholders to endorse a board comprised mainly of legacy directors (and their hand-picked successors) who have repeatedly failed to properly plan for CEO succession, misaligned the incentives of management, and failed to oversee or drive a strategy to get the streaming business to profitability or the studios to produce good content,” Peltz said in Thursday’s filing.
Peltz’s Trian Group would like Disney to be reaching Netflix Inc. of 15% to 20% by full year 2027. It also argues that there should be a board-led review of Disney’s creative process with the goal of returning the company to the “#1 box office position.” Trian Group reportedly will provide more details about its goals and initiatives to achieve those goals during a full shareholder presentation at a date that has not been announced yet.
This proxy filing is the latest chess move in this conflict between Trian Group and Disney. Earlier this month Disney entered into a info-sharing agreement with ValueAct Capital, another activist shareholder. In exchange, ValueAct is planning to support Disney’s slate of board nominees that were shared this last week. The vote for board members will be at Disney’s annual shareholder meeting sometime this spring.
What do you think of this new move by Nelson Peltz and his Trian Group? Will he be successful in getting elected with Jay Rasulo to Disney’s board? How do you think this will play out? Share your thoughts and opinions in the comments below!