Activist Nelson Peltz Aims to Get a Disney Board Seat
Posted on 01/13/2023
Trian Fund Management, L.P. (Trian), whose investment funds collectively own approximately 9.4 million common shares of The Walt Disney Company (NYSE: DIS) valued at approximately US$ 900 million filed a preliminary proxy statement with the Securities and Exchange Commission for the election of Nelson Peltz, its Chief Executive Officer and Founding Partner, to Disney’s Board of Directors at the 2023 Annual Meeting of Shareholders.
Trian Partners penned a January 11, 2023 letter stating, “Disney is one of the most advantaged consumer entertainment companies in the world, with unrivaled global scale, irreplaceable brands, and opportunities to monetize its intellectual property (“IP”) better than its peers by leveraging the Disney “flywheel” (e.g., networks, theme parks, consumer products, etc.). As such, Disney should be well positioned to navigate the ongoing transition from legacy content distribution channels to streaming.
However, despite Disney’s significant advantages, recent share price and operating performance have been disappointing. Disney shares are currently trading near an 8-year low despite the Company’s recent decision to re-hire Bob Iger as CEO (see Appendix A). The Company’s total shareholder return (“TSR”) has materially underperformed the S&P 500 over 1-year, 3-year, 5-year and 10-year periods by -24%, -60%, -66%, and -116%, respectively ii (see Appendix B). Operating performance has deteriorated, including a 50% decline in adjusted Earnings Per Share (“EPS”) since FY 2018 despite Parks profitability surpassing historical levels (see Appendix C).”
Peltz believes that Disney’s current problems are primarily self-inflicted such as failed succession planning (Iger came back), excessive compensation practices, and poor capital allocation, among other issues.
