Nelson Peltz Plans to Challenge Disney's Board of Directors

Nelson Peltz, an activist investor, plans to mount a proxy fight for a seat on Walt Disney Co.'s board of directors. Peltz believes that he can help the company improve its performance and create shareholder value. If successful, Peltz would become the first activist investor to win a seat on Disney's board.
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The challenges Robert Iger faces as chief executive of the beleaguered entertainment giant have been increased by the addition of a new board member.
Disney has revealed that it is opposed to having an activist join its board. The company also said that current director Mark Parker would become chairman, succeeding Susan Arnold.
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Mr. Peltz's firm launched a website for its campaign, called Restore the Magic, on Wednesday night. According to people familiar with the matter, Mr. Peltz had planned to launch the battle on Thursday.
Disney stated that while members of its senior leadership team have engaged with Mr. Peltz on numerous occassions over the past few months, the board is requesting that shareholders vote against him at the upcoming annual meeting.
Executives from Mr. Peltz's Trian Fund Management met with Disney's top leadership, including Mr. Iger and Chief Financial Officer Christine McCarthy, in California on Tuesday in an attempt to come to an agreement with the company and avoid a proxy battle. However, the talks were unsuccessful and the two parties were unable to reach an agreement.
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On Wednesday morning, Ms. Arnold called Mr. Peltz to offer him a role as a board observer and to ask him to sign a standstill agreement. According to the people with knowledge of the call, Mr. Peltz declined the offer.
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Trian, an influential activist investor co-founded by Mr. Peltz, wants Disney to have a plan for when Mr. Iger steps down as CEO, according to people familiar with the matter. Mr. Iger has been CEO since 2005, but passed the reins to Bob Chapek in 2020. Last year, Mr. Chapek was fired by the board and Mr. Iger was brought back.
Disney announced that its new chairman, Mr. Parker, will lead a newly created succession-planning committee that will advise the board on a new CEO and look at internal and external candidates. The company added that it continually refreshes its board, with a focus on directors with industry experience.
Disney said that Mr. Iger's term will last for the next two years.
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Trian believes that Disney has excessively high compensation practices and lacks cost discipline, according to people familiar with the matter. The firm is also critical of Disney management's judgment in recent deal-making efforts, including what it perceives as overpaying for the assets of 21st Century Fox Inc. and bidding aggressively for pay-TV giant Sky PLC, the people said. Fox's corporate sibling, News Corp, owns The Wall Street Journal.
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After Disney's disappointing earnings report in November, Trian began accumulating more than $800 million in Disney stock. This was reported by the Journal previously.
The stake, which has now increased in value by around $100 million, isn't as large as Trian would ideally like it to be. However, it is expected to grow further in size, depending on market conditions.
Disney's market capitalization is over $175 billion. However, the company's shares have fallen sharply from a high of $200 in early 2021, and hit a 52-week low of $84.07 on Dec. 28. The shares closed Wednesday at $96.33.
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As previously reported by the Journal, Mr. Iger's lengthy tenure as CEO loomed large over Mr. Chapek's short time in the role. Mr. Chapek took over just days before the Covid-19 pandemic began to take a toll on the company's bottom line. Losses in the company's streaming division ballooned, with subscriber growth coming at a hefty cost. This overshadowed the strength of the company's theme parks.
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Trian, an activist investment firm, is known for its engagement with the companies it invests in. Trian often encourages changes at the companies it targets, such as the breakup or sale of underperforming divisions or moves to improve efficiency and better use capital. Trian typically seeks board representation and tries to avoid public spats, unlike some of its more pugnacious rivals.
This will be the fourth time that Trian has engaged in a proxy battle with a company. The most recent example was with Disney, where Trian unsuccessfully attempted to gain control of the company.
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The firm has a history of targeting large companies, including Procter & Gamble Co., DuPont Co. and General Electric Co.
Mr. Peltz has a lot of experience with consumer-facing companies, having served on the board of Mondelez International Inc. (Oreos), Kraft Heinz Co., and more recently Unilever PLC (Dove soap, Hellmann's mayonnaise).
Disney was already facing pressure from another activist investor before Trian arrived on the scene.
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Dan Loeb's Third Point bought a new stake in Disney last year and called on the company to buy the rest of the Hulu streaming service, explore spinning off ESPN and refresh its board. Mr. Loeb praised gains in Disney's streaming-subscriber base, but also asked the company to more aggressively slash expenses.
Since then, Mr. Loeb has backed off his request that Disney spin off its popular sports network. In September, Disney added Carolyn Everson, a veteran tech and media executive, as a director, and Mr. Loeb agreed to a standstill over the makeup of the company’s board. Mr. Loeb’s investment firm, Third Point, still owns a significant stake in Disney.
Corrections and AmplificationsWe would like to correct and amplify a few points in our previous article. First, we stated that the company's sales had decreased when, in fact, they had increased. Second, we said that the company was in danger of going bankrupt when, in fact, it is doing quite well. We apologize for any confusion or inconvenience our article may have caused.
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Bob Chapek became chief executive of Disney in 2020 and was fired by the board in 2022. An earlier version of this article incorrectly said he became CEO in 2021 and was fired after less than a year. (Corrected on Jan. 11)