One day after The Walt Disney Co. announced two new members of its board of directors, billionaire investor Nelson Peltz and his Trian Fund Management firm Thursday renewed a proxy battle in hopes of gaining control of an unknown number of seats on the Burbank-based entertainment giant's board.
"Trian intends to take our case for change directly to shareholders," according to a statement issued Thursday by Trian -- which claims to control $3 billion in Disney stock.
According to the company, Trian officials had conversations with Disney CEO Bob Iger, and Disney offered Trian a chance to meet with the company's board. But Disney rejected Trian's request for representation on the board, including a seat for Peltz.
Peltz had waged a proxy fight against Disney earlier this year in hopes of landing a seat on the Disney Board of Directors, but he dropped the effort in February when Iger announced a massive restructuring plan that included 7,000 layoffs and $5.5 billion in cost cuts.
But in its statement Thursday, Trian said that since February, Disney shareholders have lost about $70 billion in value.
"Disney's share price has underperformed proxy peers and the broader market over every relevant period during the last decade and over the tenure of each incumbent director," according to Trian. "Investor confidence is low, key strategic questions loom, and even Disney's CEO is acknowledging that the company's challenges are greater than previously believed."
The Walt Disney Co. issued a statement of its own Thursday in response to Trian, defending the company's performance.
"The Walt Disney Company has a proven track record of delivering long- term value to our shareholders and is in the midst of a significant transformation to reinforce our position as the world's preeminent entertainment company," according to Disney. "Over the past 12 months, we restructured the company to restore creativity to the center of all our businesses as we significantly reduce costs and drive efficiencies, and we are on track to achieve about $7.5 billion in cost savings -- $2 billion more than our original target."
The company summarized its key business strategies and added, "With one of the strongest balance sheets in the media sector, Disney expects free cash flow to approach pre-COVID levels in fiscal 2024, and the Board and management are steadfast in our commitment to ensuring The Walt Disney Company's long-term success for the benefit of all our shareholders."
On Wednesday, Disney announced the addition of two new members to its Board of Directors -- Morgan Stanley CEO James Gorman and former Sky CEO Jeremy Darroch. Current board member Francis A. deSouza plans to leave the board.
Trian, in its statement, conceded that those moves "represent an improvement from the status quo," but insisted those changes "will not, in our view, restore investor confidence or address the root cause behind the significant value destruction and missteps that this board has overseen."
It was unclear exactly how many seats Trian might seek to gain on the Disney board.
Disney officials said there is an ulterior motive behind the fight, noting Peltz's ties in the proxy battle with former Marvel Entertainment chairman Isaac Perlmutter, who was fired by Disney in March.
"Mr. Peltz, in partnership with Isaac Perlmutter, a former Disney executive, intends to take its case to shareholders," according to Disney. "Mr. Perlmutter owns 78% of the shares that Mr. Peltz claims beneficial ownership of, or more than 25 million of the 33 million shares. This dynamic is relevant to assessing Mr. Peltz and any other nominees he may put forth as directors, as Mr. Perlmutter was terminated from his employment by Disney earlier this year and has voiced his longstanding personal agenda against Disney's CEO, Robert A. Iger, which may be different than that of all other shareholders.
"The Disney Board will recommend to shareholders its slate of director nominees in the company's proxy statement to be filed with the Securities and Exchange Commission and distributed to all shareholders eligible to vote at the annual meeting."
That meeting is expected to occur in spring of next year.
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