Disney shareholders reject activist investor Nelson Peltz's board nominees

The vote ends a months-long proxy battle over the company's strategy.

Disney shareholders on Wednesday rejected board nominees aligned with activist investor Nelson Peltz, ending a months-long proxy battle centered on the company's navigation of the early streaming era.

Instead, a majority of shareholders voted in favor of a slate of 12 board nominees put forward by Disney, the company announced at its meeting. Annual shareholders meeting. (Disney is the parent company of ABC News.)

Trian Partners, the hedge fund founded by Peltz, has leveraged its position as one of Disney's largest shareholders to carry out a high-profile campaign criticizing the company's growth strategy and insisting on a plan for a successor to the 73-year-old. CEO Bob Iger.

Speaking about the activist campaign at Morgan Stanley's investor conference earlier this month, Iger said: Described Stocks have performed strongly recently and dismissed Peltz's campaign as an effort “designed to distract us.”

“It is clear that many companies are experiencing the impact of disruption,” Iger added. “It requires not only a great deal of knowledge, but a tremendous amount of time and focus.”

Peltz, 81, sought board seats for himself as well as former Disney CFO Jay Rasulo. They called on shareholders to hand over to them the seats currently occupied by Maria Elena Lagomasino and Michael Froman.

The proxy war came as the shift to live broadcasting upended the media business. After suffering streaming outages and declining attendance at movie theaters, Disney has been able to grow its audience thanks to its suite of streaming services, which includes Disney+, Hulu, and ESPN+. However, the new platform is not yet profitable.

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via a website Dedicated to the activist campaign, titled “Reclaim the Magic,” Trian Partners calls on Disney management to “develop and articulate” a clear streaming strategy that can achieve “Netflix-like margins.”

Outlining a series of reforms, the site demands reductions in broadcast business costs, a complete review of the creative process, and a focus on acquiring new intellectual property.

For his part, Iger said Disney is in the midst of transforming the company to meet the streaming challenge identified by Peltz.

Disney+ has amassed 111.3 million subscribers over the roughly five years since its launch, though the platform lost 1.3 million subscribers over the last three months of 2023, a quarterly profit in February. show up.

The company said in the earnings report that it reduced financial losses associated with live streaming by $300 million over the three-month period, maintaining a pace of cost reductions of $7.5 billion by the end of fiscal year 2024.

Cost cuts have helped boost Disney's stock price 23% since its October low, but the price is still down 30% from its March 2021 high.

The issue of succession is another major point of contention in the proxy battle.

During Iger's first stint as Disney CEO, from 2005 to 2020, he managed to postpone his departure several times. He returned to his position in November 2022 under an agreement to step down again after two years, but months later the company announced an extension of the contract until 2026.

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Trian Partners urged the company to clarify the succession process and conduct a comprehensive search for Iger's replacement, the goal of the activist campaign. website He says.

After receiving a contract extension nearly a year ago, Iger reiterated in a statement his commitment to a smooth succession.

“The importance of the succession process cannot be overstated, and while the Board continues to evaluate a highly qualified slate of internal and external candidates, I remain intensely focused on a successful transition,” Iger said. He said.

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