Dimon Backs Iger In Disney Proxy Fight, Stock Up On Optimism

In a significant development for the ongoing proxy battle at Disney, JPMorgan Chase CEO Jamie Dimon has publicly endorsed Bob Iger, the company's current CEO. This move throws considerable weight behind Iger's leadership as he faces pressure from activist investor Nelson Peltz and Trian Partners.

According to David Faber, Dimon offered a glowing endorsement of Iger: "Bob is a first-class executive and outstanding leader who I've known for decades. He knows the media and entertainment business cold and has the successful track record to prove it." Dimon emphasized the unique challenges and skills required in this industry, suggesting Iger possesses the necessary expertise and engagement abilities.

He further cautioned against the potential risks of adding members to the board, especially considering Disney's recent progress under Iger's leadership.

Trian Partners, led by Nelson Peltz, has launched an intense proxy fight, seeking to place Peltz and former Disney CFO Jay Rasulo on the board at the company's annual meeting on April 3rd. Their 133-page white paper outlines demands for leadership restructuring and overhauling Disney's traditional TV channels, viewed by Trian as a shrinking market. Notably, Peltz seeks to achieve "Netflix-like margins" of 15% to 20% by 2027, highlighting Netflix as Disney's main competitor.

In response to these pressures, Iger has implemented significant restructuring efforts, including employee layoffs, aimed at streamlining the vast media conglomerate and making the Disney+ streaming platform profitable. Although February's earnings report displayed positive progress in cost reduction and a narrowing of streaming losses, it wasn't enough to appease Peltz.

Dimon rarely enters proxy battles, making his public support for Iger a notable event. JPMorgan Chase has a history of advising Disney on defensive matters, lending further weight to Dimon's endorsement.

This move signifies industry confidence in Iger's leadership and the substantial growth Disney has achieved under his direction. It underscores the strong foundation Iger has built for the company's future and adds momentum to his position in the proxy fight.

As of March 13, 2024, the news of Dimon's endorsement appears to be resonating positively with the market. Disney stock (DIS) is currently trading near the top of its 52-week range and above its 200-day simple moving average. Data from CNN Money indicates a share price increase of $0.80 (0.71%) since the previous market close. Additionally, the stock opened $0.38 higher than its prior closing price, reflecting investor optimism about Disney's future prospects.