Disney gears up for an an intense boardroom clash as activist Peltz eyes two seats

In a significant development set to impact the entertainment giant Walt Disney, activist investor Nelson Peltz has nominated himself and former Disney Chief Financial Officer James “Jay” Rasulo for seats on the company’s board. This marks Peltz’s second attempt this year to influence Disney’s strategic direction.

Trian Fund Management, Peltz’s investment vehicle boasting approximately $3 billion in Disney shares, initially withdrew its bid for a board seat in February 2023. This move followed Disney’s comprehensive restructuring plan, which addressed key concerns raised by Peltz.

Trian declared in a press release on Thursday, 14 December 2023, that as Disney's largest active shareholder, they could no longer remain passive while the incumbent directors and their selected replacements obstructed essential change. The activist investor has outlined a compelling case for the inclusion of its two independent director candidates.

While Peltz initially hinted at nominating up to four directors, the number has been scaled back to two. This decision comes on the heels of Disney’s recent bylaw revamp and the announcement of the addition of two new directors.

Disney’s stock experienced a 1.1% increase to $93.94 on Thursday, 14 December 2023, with shares up 8% in 2023. However, media analysts express concerns about the complexity of the situation, especially amid the company’s significant cost-cutting efforts.

James “Jay” Rasulo, Peltz’s ally in this board battle, brings extensive experience from his tenure at Disney, starting in 1986. His background includes key positions and oversight of significant expansions, such as the California Adventure theme park at the Disneyland Resort.

Peltz and Rasulo are positioning themselves as advocates for necessary changes, focusing on cost reduction, succession planning, and the revitalization of Disney’s streaming operations. Trian has been critical of Disney’s financial performance, citing lower per-share earnings and underperforming margins in its streaming and media operations.

Disney responded to Trian’s move, emphasizing its diverse and highly qualified board’s commitment to long-term performance, strategic growth initiatives, and increasing shareholder value. Trian’s partnership with ousted Marvel Entertainment executive Isaac Perlmutter was also highlighted.

Amid ongoing efforts to achieve $7.5 billion in cost savings and make its streaming business profitable, Disney faces a pivotal moment in its corporate governance. Shareholders will be closely watching as the proxy battle unfolds, impacting the future trajectory of this iconic entertainment company.