Corporate board room proxy battles can be frustratingly unpredictable. Even a company confident in its leadership and strategy cannot afford complacency when someone is seeking to depose board directors. It’s something Disney CEO Bob Iger knows a thing or two about.
The last time Disney faced a full-fledged proxy fight was 20 years ago. More than 40 percent of shareholders voted against the Disney board and its then-CEO, Michael Eisner. The executive lost his chairman title within hours and told the board of his plans to step aside as CEO in mere months.
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A turning point in that battle, as Bob Iger recalled in his 2019 memoir, The Ride of a Lifetime, was the decision by the influential Institutional Shareholder Services (ISS) to back the activists. “I remember thinking that it was like we’d entered a conventional war … and now another party had launched nuclear weapons,” Iger wrote of learning about the ISS recommendation, noting that the organization “typically influences more than a third of the voting shares in a proxy election.”
Disney is once again facing an activist proxy fight at a moment of weakness, with Nelson Peltz’s Trian Partners (backed by former Marvel chairman Ike Perlmutter’s $3 billion or so of Disney stock) aiming to put Peltz and former Disney CFO Jay Rasulo on the board, and another activist, Jason Aintabi’s Blackwells Capital, nominating three directors of its own. ISS is expected to issue its recommendation for this year’s Disney proxy filing about two weeks ahead of the annual meeting April 3, and observers will be paying close attention in the event (however unlikely) they decide to go nuclear again.
And there are other variables this year. A startup, Shareholder Vote Exchange, lets retail shareholders who are ambivalent about the proxy sell their votes to others. The firm says that a party has bid $100,000 for 500,000 Disney proxy votes. To buy 500,000 shares at market prices would cost more than $56 million, as of this writing, but the votes can be acquired for pennies on the dollar. There is precedent to suggest that such votes could make a difference. In Peltz’s 2017 activist campaign against Procter & Gamble, the preliminary results saw Peltz win by just 42,000 votes.
“It’s uncertain whether that many votes will be enough to swing the outcome one way or another, especially given the involvement of multiple other activists such as Blackwells, ValueAct and Ancora,” says Steven Xu, co-founder and COO of the Shareholder Vote Exchange. “But the dueling sides don’t have much of a choice at this point. Trian owns billions of dollars worth of Disney stock, and Bob Iger is looking to reassert his authority and define his legacy at Disney.”
Disney’s 2024 proxy fight shares some superficial similarities from the battle 20 years earlier, with a weakened Walt Disney Company facing technological change; Questions about succession planning (for Eisner in 2004, Iger in 2024); A high-profile activist investor (Roy E. Disney in 2004, Peltz and Perlmutter in 2024); A third-party looking to insert themselves into the fight (Brian Roberts and Comcast in 2004, Aintabi and Blackwells Capital in 2024).
But this year’s proxy fight is radically different from 2004. This time, the Disney family has unified around Iger, including Roy P. Disney, as well as Abigail Disney (who once compared Iger to Ebenezer Scrooge).
Now, the children of Roy E. Disney have signed a letter calling Trian and Blackwells “wolves in sheep’s clothing, just waiting to tear Disney apart if they can trick shareholders into opening the door for them.”
And while the wild card in 2004 was concern about a hostile Comcast takeover, this time around Blackwells seems to be spending as much time attacking Peltz and Trian (noting Peltz’s $600,000 security bill from his role on the Wendy’s board, and referring to fellow Trian nominee Rasulo as a “disgruntled former employee”) as it is challenging Iger and Disney. Blackwells has also criticized ValueAct, an activist firm that has aligned with Disney’s board in the proxy fight: “We do not believe that a company like Disney… should be sharing information with one shareholder and not all the other shareholders,” Aintabi said in a video about that deal.
And while Blackwells has released a number of presentations about Disney, combining some unlikely suggestions like spinning off real estate into a real estate investment trust, or REIT (a Wall Street innovation that’s taken off with Las Vegas casinos), or leaning into AI and spatial computing beyond its partnerships with Apple and Meta, Trian has chosen to mostly criticize Disney’s leadership and financial performance, saying that the board is the “root cause of underperformance” of Disney’s stock. On March 4 it did lay out some ideas to turn the company around, including the idea of “right-sizing” the finances at the Disney studio and linear TV networks, and scaling back ESPN’s DTC plans.
Blackwells also suggested using generative AI to create new Disney characters, with a source dryly noting that Blackwells slide decks appear to use AI-generated images with characters that bear some resemblance to Disney characters like Donald Duck, and misspelled words like “subscribber.”
While Disney’s stock price has rebounded after the Feb. 7 earnings call, in which Iger rattled off a slew of new projects, like a Moana animated sequel, a $1.5 billion investment in Epic Games and the acquisition of Taylor Swift’s Eras Tour movie for Disney+, Trian has remained dismissive. Peltz called the news a “throw spaghetti on the wall and see what sticks” strategy.
Beyond the earnings call, Disney has been aggressive in releasing its own letters to shareholders, and using Professor Ludwig Von Drake (he’s Donald Duck’s uncle) to help educate Disney’s retail shareholder base about the vote, seeking to ensure that it does not suffer a repeat of 2004.
A few months after that proxy fight, Roy E. Disney was the keynote speaker at an event hosted by The Council of Institutional Investors, and he took the opportunity to gloat, comparing Eisner to “a third world dictator of a once great country,” and touting the results of his activist campaign as being “unprecedented in the annals of American history.”
Peltz has run more than a few successful proxy fights, mostly in the consumer goods space, and while he does not have the support of the Disney family, he does have some high-profile friends (another Bob Iger nemesis, Tesla founder Elon Musk, was pictured Feb. 3 standing alongside Peltz at the Los Angeles premiere of Lola, directed by Peltz’s daughter Nicola Peltz Beckham).
But Disney’s share price is rebounding, and its corporate strategy is coming together (putting aside the succession issue). Morgan Stanley’s Ben Swinburne, in a March 3 note titled “realistic optimism,” wrote that the firm was raising its price target on Disney “to reflect a more rapid and confident path to streaming profits in the quarters and years ahead.”
And unlike in 2004, when a majority of Disney’s own employees voted to withhold their votes for Eisner (as recounted in the book DisneyWar), there’s little question whose loyalty they share this time around.
So while the ISS recommendation is still uncertain, and the ability for retail shareholders to sell voting rights is a new wrinkle, there’s reason to believe this proxy fight won’t be like the last one, though the sheer number of players on the field mean that the ending remains unwritten.
Speaking at a Morgan Stanley conference on March 5, Iger seemed exasperated by the proxy fights, noting that managing a company with as many different business lines as Disney “takes not only a significant amount of knowledge, but a tremendous amount of time and focus.”
“And this campaign is in a way designed to distract us, to take our eye off all those balls that we talked about … It’s that simple,” Iger said. “And I am working really hard to not let this distract me. Because when I get distracted, everybody who works for me gets distracted. And that’s not a good thing.”
This story first appeared in the March 6 issue of The Hollywood Reporter magazine. Click here to subscribe.
