April 16, 2024

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Disney defeats activist investor Nelson Peltz in proxy fight

Disney defeats activist investor Nelson Peltz in proxy fight

Disney (DIS) has successfully fended off activist investor Nelson Peltz in his bid to secure board seats at the company, officially ending a hotly contested proxy battle that has plagued the entertainment giant and its CEO Bob Iger for months.

The company said Wednesday at its annual shareholder meeting that Disney's current board of directors will remain in place after a shareholder vote that gave the company's slate a win “by a significant margin.” About 75% of individual shareholders voted for Disney's current board, according to a source familiar with the situation.

The results represent a win for Disney in the short term because they end months of uncertainty and distraction for Iger and the company's management team. But it also means Disney's board will face more pressure to deliver results as the company tries to navigate consumers' shift away from traditional cable packages to mostly unprofitable streaming services.

Besides defeating Peltz, who ran for seats for himself and former CFO Jay Rasulo, Disney also defeated activist Blackwells Capital, who urged shareholders to add his three nominees to the current board.

Disney stock trading fell following the results, with shares closing down more than 3%.

“Press on Bob Iger [until he retires in 2026] “He's going to stay really right,” Needham analyst Laura Martin told Yahoo Finance Live after Wednesday's results. “Activists are circling this company and are only being kept at bay if the stock price continues to rise.”

Disney has received backing from high-profile agent Glass Lewis, as well as backing from high-profile names such as JPMorgan CEO Jamie Dimon; Director and creator of “Star Wars” George Lucas; grandchildren Walt Disney and his brother Roy; And Lauren Powell jobsthe widow of former Apple CEO Steve Jobs and a long-time investor in the company.

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File photo: Nelson Peltz, co-founder of Trian Fund Management LP.  He spoke at the WSJD Live conference in Laguna Beach, California on October 25, 2016. On Wednesday, Disney defeated Peltz and his bid to secure board seats at the company, officially ending a hotly contested proxy battle that has plagued the entertainment giant for months.  Reuters/Mike Blake/archive photo

On Wednesday, Disney defeated Nelson Peltz and his bid to secure board seats at the company, officially ending a hotly contested proxy battle that has plagued the entertainment giant for months. (Mike Blake/Reuters/File Photo) (Reuters)

Prior to the vote, Peltz had the support of influential proxy advisory firm Institutional Shareholder Services (ISS), along with prominent shareholders such as the California Public Employees Retirement System (CalPERS), the nation's largest public pension fund; Neuberger Berman, global asset manager; And fellow activist Ankura.

Regardless of the outcome of the vote, Trian will monitor the company's performance, Peltz said at the shareholder meeting before the results were announced.

“The long-term performance record remains disappointing,” he said.

How we got here

Peltz's hedge fund Trian Fund Management, which owns $3 billion in Disney common stock (including shares owned by former Marvel Entertainment Chairman Ike Perlmutter), renewed its attempt to replace Disney's board of directors last year as the stock price hit multi-year lows. Years.

The activist was looking to replace two current board members — the former CEO of Mastercard Michael Froman And WE Family Offices CEO Maria Elena Lagomasino – With himself and his messenger.

In its fight, Trian cited the loss of tens of billions in shareholder value, a drop in consensus earnings estimates for the next two years, and disappointing studio content as some of the reasons behind its board's push.

Succession was also a key issue for Peltz's supporters following the messy 2022 ouster of former CEO Bob Chapek.

Disney responded to many of Trian's claims, saying they were made up “Remarkable progress” At the heart of its business. Some of the changes included implementing an ad-supported tier for the Disney+ streaming service as well as price increases on streaming services, theme parks, and password sharing campaigns.

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The company has confirmed that it is “Actively engaged in the high-priority work of succession planning.” Bob Iger's contract is scheduled to expire at the end of 2026.

Investors reacted positively to the changes. Disney stock, which is up about 35% so far this year, was the Dow's best year-to-date performer in the first quarter. Shares are currently hovering at 52-week highs.

Correction: An earlier version of this article stated that Disney shares are trading at record levels. It has since been corrected to reflect trading levels at 52-week highs. We apologize for this error.

Alexandra Canal He is a senior reporter at Yahoo Finance. Follow her on X @allie_canal, linkedin, And email it to [email protected].

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