War of governance | Victory for Disney executives against activist investors

(New York) Disney shareholders on Wednesday awarded victory to the management of the entertainment giant against activist investors, unhappy with the group’s strategy, who wanted to join its board of directors.




Shortly after the opening of the general meeting of its shareholders, Disney indicated, in a press release, that the twelve members of its board of directors candidates for re-election had been renewed “with a comfortable margin”.

“I want to thank our shareholders for their confidence in our board and in management,” commented Bob Iger, boss of the group, quoted in the press release.

PHOTO HAIYUN JIANG, THE NEW YORK TIMES

Bob Iger

With the disruptive clash of resolutions now behind us, we are eager to focus 100% of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers.

Excerpt from the press release from Bob Iger, CEO of Disney

This vote is a success for him against the billionaire investor Nelson Peltz, of the investment company Trian Capital, who has been criticizing the board of directors for many months regarding the management of the group.

Around 3 p.m. (Eastern time), Disney stock was down 2.48%.

Trian condemned the return to the helm of Bob Iger – who had already led the group from 2005 to 2020 – and the dismissal of the man whom the latter had himself chosen as successor.

In November 2022, Disney fired Bob Chapek and recalled Mr. Iger, currently 73, to lead the group for two years. But his contract was extended in July 2023, until the end of 2026.

Mr. Peltz had submitted to a vote of shareholders his candidacy as director as well as that of the former financial director of Disney, Jay Rasulo.

A prospect that current leaders have actively tried to prevent.

Trian said he was “disappointed” with the outcome of the vote, but “proud” of its impact.

Under surveillance

“Since we engaged with the group in late 2023, Disney has announced a range of new operational initiatives and capital improvement projects,” he said.

“We will monitor the group’s performance and focus on continuing its success,” he warned.

The investor launched his campaign in late 2023, criticizing what he saw as Disney’s disappointing profit margins in the streaming and in its media-related activities in general, as well as poor governance.

“The deep root of Disney’s underperformance (…) lies in the board of directors, which is too closely linked to a long-term boss and too disconnected from the interests of shareholders,” noted Trian in December.

The investment company holds 32.4 million shares, or nearly 2% of Disney’s capital. She had recently softened her criticism of Mr. Iger, while criticizing Disney’s clumsy efforts to replace him.

Trian wasn’t alone in wanting a change.

In a separate but similar move, hedge fund Blackwells Capital had proposed the appointment of three directors. He also denounced the board of directors being too close to Bob Iger.

According to Wall Street Journalthis battle at the top could cost more than $70 million, making it the costliest shareholder conflict ever.

For several days, the American media – referring to unidentified sources – had been arguing that Disney was heading towards victory.

According to Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, Disney has been struggling “for several years” to organize succession at the top.

He recalled the already bumpy transition between Michael Eisner, Disney boss from 1984 to 2005, and Bob Iger.

“The board of directors has done a bad job for the succession,” noted Mr. Eisner who, before the announcement of the result of the vote, had indicated that Disney would be “under a microscope” even in the event of victory.


reference: www.lapresse.ca

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