Nelson Peltz Loses Disney Proxy Fight: What Happened?

This story was originally published on April 2 and has been updated with the outcome of Disney’s proxy battle.

Update, Wednesday, April 3: Disney’s annual shareholders meeting didn’t quite have the fireworks many people had hoped for. After a brief speech from Nelson Peltz, who was swiftly cut off when he ran over his allotted time, Disney announced that its shareholders had stayed loyal to CEO Bob Iger, thus bringing the saga of “the distracting proxy contest,” as Iger called it in a press release, to an end. Disney’s board candidates earned a whopping 94 percent of votes — shutting out Peltz and his ally Jay Rasulo, the former Disney CFO. RIP to the reported $40 million Disney spent on a matter that ultimately resolved pretty anti-climactically, but maybe it was worth it.

Original April 2 story follows:

If you are the fun, harmless type of nerd (Disney fan) or the boring pill-type (person who reads financial news), there’s a good chance you’ve seen something about this year’s annual Disney shareholder meeting. It is shaping up to be a bit of a rumble-cruise-in-the–Jungle Cruise. Trian Fund Management, an activist investing hedge fund co-founded by billionaire Nelson Peltz, has launched a shareholder campaign titled Restore the Magic, arguing that Disney CEO Bob Iger and Disney management must make a number of radical changes to reverse course on poor business decisions leading to downward-trending earnings per share, publishing a 133-page white paper airing out their grievances and demands. Among these are concerns about the costly underperformance of Disney’s streaming ventures and middling performance of its recent feature films. Their number-one demand? Instate Peltz to the board, along with former Disney CFO Jay Rasulo. They’ve gained the support of proxy advisory firm Institutional Shareholder Services and the CalPers U.S. Pension Fund. Trian owns $3 billion in Disney common stock, and is using its weight to wage a proxy fight, the results of which will be revealed during April 3’s shareholder meeting. In Disney’s corner, which is being led by proxy advisory firm Glass Lewis, there’s the Disney grandchildren, Laurene Powell Jobs (founder of Emerson Collective), and George Lucas (a.k.a. the company’s largest individual shareholder). Former Disney CEO Michael Eisner is also supporting Disney’s board, while Ike Perlmutter, Marvel’s former chairman, is supporting Trian as a silent partner. Here’s what that actually means for the rest of us non-billionaire chumps.

An activist investor in this instance is not an actual activist trying to affect meaningful change from the inside out. When I see an elephant fly, am I right? This sort of activism refers to shareholders using their stakes to put pressure on management when they are dissatisfied with a company’s performance. First and foremost, as stated in Restore the Magic’s online resources, this means increasing shareholder value via changes and succession plans to management and also, of course, cost-cutting. This isn’t activism like using their position to argue that Disney Parks employees shouldn’t face such precarious economic conditions that they rely on food banks and sleep in their cars. It certainly doesn’t mean reining in the rate of park-ticket inflation putting a strain on families at a rate of nearly 3:1 versus overall inflation.

A proxy fight happens when stockholders use their proxy votes to contest a company’s management, often by electing someone new to the board or other directorial position. Like on Succession.

Nelson Peltz is someone who does this type of alternative investing for a living. He is currently non-executive chairman at Wendy’s, as well as a director at Mondelez, Sysco, and the Madison Square Garden Company. However, his performance in a number of high-profile businesses has been contested. Jeffrey Sonnenfeld and Steven Tian at Fortune pointed out that the majority of companies that Peltz or another Trian representative have involved themselves with actually underperformed the S&P 500.

“Restore the Magic” might be a lot more RETVRN-coded a catchphrase than it lets on. In a recent profile in the Financial Times, Peltz expressed a “go woke, go broke” attitude toward Marvel, specifically, saying, “People go to watch a movie or a show to be entertained […] They don’t go to get a message.” More damningly, he clarified, “Why do I have to have a Marvel that’s all women? Not that I have anything against women, but why do I have to do that? Why can’t I have Marvels that are both? Why do I need an all-Black cast?”

He hosted a fundraiser for Trump’s 2020 reelection campaign, said he will “probably” vote for him again this year, and recently hosted a dinner with Elon Musk “just to talk about what the country needed.” Seems like there are some crucial judgment issues at play here, not to mention his lack of experience in the entertainment field. Sir, this isn’t a Wendy’s.

Yes, he’s actress Nicola Peltz’s dad, making him Brooklyn Beckham’s father-in-law. Nicola has a tattoo that says “family first” in Hebrew so they must be close.

Analysts over at Bloomberg News point out that the 133-page Restore the Magic white paper has a lot of grievances, but “not a whole lot of specifics in terms of what Nelson and Jay Rasulo would do differently.” Their main issue, and one that many Disney shareholders can agree upon, is that Disney leadership must put into place an actual plan for changes in succession to “ensure smooth CEO transitions” after the past decade’s Iger-Chapek-Iger Bob sandwich. Additionally, they want to see their streaming efforts reach “Netflix-like margins” by fiscal year 2027, and see greater return for shareholders on Disney’s tens of billions of dollars’ worth of investment in the Parks.

Their main motivation is, “fundamentally and crudely, we want the stock to go up.” They want shareholders’ shares to be worth more. In the 21st century, a major corporation’s means of doing this do not always align with the tertiary aim of making a company the best version of itself it can be. Often, it means cost-savings measures. Rasulo says as part of the Restore the Magic campaign that something’s “broken” with Disney’s creative content, which … yeah, we all saw Elemental and Wish. But Trian proposes that if they get their spots on the board, they’ll enact “Board-led review of creative processes and structure to restore leadership accountability and reclaim #1 box office position w/ leading economics.” It’s hard to see how board members sticking their nose in the creative process and making animators and filmmakers adhere to their unreliable economic predictions … will be a good thing for studio creativity. But they share some common ground with many Disney fans that, yes, there is something off at Disney creative, as the studios are in a sequel-swamped flop era.

There are a couple of reasons for hope in Peltz’s campaign. One of their strategic initiatives is to “Prioritize new intellectual property to reignite the ‘flywheel’ and drive Disney’s long-term growth.” The “flywheel” is a term that conceptualizes Disney’s core — its films — as an economic engine that pays off in the long run by building loyalty and creating spinoff products. Another stated goal is to clarify “plans to address new competitive threats to Walt Disney World, and a commitment to improving the guest experience at domestic parks.” This refers in no uncertain terms to WDW’s Orlando competitor, Universal Studios, and its upcoming Epic Universe park slated to open in 2025. As Disney has increased costs, introduced muddled apps and pay-to-play add-ons that deplete from the guest experience, and pulled back from “blue sky” parks planning announcements, Universal Studios Resorts Orlando has been investing in more affordable hotels and e-ticket attractions and will soon debut the first new “gate” in Orlando since Disney’s Animal Kingdom opened in the 1990s. Rasulo has years of experience running Disney Parks and Resorts before he became CFO, and this element of Trian’s plan is a welcome sight to any parks fan.

No!

According to HuffPost, Ron DeSantis was on the guest list for the Peltz-Beckham wedding, and Nicola texted the wedding planners, “Desantis must be OFF THE GUEST LIST. PLEASE CONFIRM!” and he wasn’t at the wedding. And then, after the wedding, Nelson Peltz tried to sue the wedding planners, but they countersued saying that he always wanted one thing guest-list-wise and his wife and daughter wanted another and it was impossible to juggle. Something is rotten in the state of Florida!