Disney Wins Proxy Fight, Turning Back Activists

Disney's leadership prevailed Wednesday in a high-profile and costly proxy contest against activist investors who had sought to shake up the company's board over concerns about successorship planning.

The entertainment giant said its full slate of 12 company nominees had been reelected by a "substantial margin," turning back efforts by Trian Fund Management and Blackwells Capital.

"I want to thank our shareholders for their trust and confidence in our Board and management," longtime Chief Executive Bob Iger said in a press release.

"With the distracting proxy contest now behind us, we're eager to focus 100 percent of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers."

Led by billionaire investor Nelson Peltz, Trian had blasted the Disney board over botched leadership planning after Iger, who stepped down as CEO in 2020, was reinstated following his successor's firing in November 2022.

Peltz has nominated himself and former Disney chief financial officer Jay Rasulo to the board -- provoking a big fight with Iger and other Disney brass.

Trian, which had urged shareholders to withhold votes from two other board members -- Michael Froman and Maria Elena Lagomasino -- took the high road after they were reelected with Disney's other hand-picked board.

While "disappointed" with the vote, Trian said it was "proud" of its impact.

"Since we re-engaged with the Company in late 2023, Disney has announced a host of new operating initiatives and capital improvement plans. The Board has been refreshed with two new directors," Trian said.

"We will be watching the Company's performance and be focusing on its continued success."

Peltz launched the campaign late last year, pointing to Disney's sub-par profit margins in its streaming and overall media businesses and poor corporate governance.

"The root cause of Disney's underperformance... is a board that is too closely connected to a long-tenured CEO and too disconnected from shareholder interests," Trian said in December.

In more recent communications, Trian, which holds 32.4 million shares, or almost two percent of Disney, softened its criticism of Iger personally, while spotlighting Disney's clumsy efforts to identify a new chief.

In November 2022, Disney fired Iger's hand-picked successor Bob Chapek and reinstated Iger in a move that shocked Hollywood.

Last July, the company extended Iger's contract through the end of 2026, giving him two more years for an assignment that had originally been envisioned as a two-year gig.

In a separate but parallel effort, another hedge fund, Blackwells Capital, had nominated three board members, saying the current board is too close to Iger.

The Wall Street Journal has estimated that the overall battle could cost more than $70 million, which would make it the priciest shareholder fight ever.

Heading into Wednesday, US media, citing unnamed sources, had reported that Disney was poised for a win.

Iger's position was boosted by strong quarterly earnings in February and the announcement of a hefty dividend hike and lofty share repurchases.

Charles Elson, a founding director of the Weinberg Center for Corporate Governance at the University of Delaware, noted Disney has struggled with successorship "for years," pointing to a bumpy transition that eventually led to Iger taking over from Eisner.

"The board did a poor job in the succession," said Eisner, who said prior to the vote announcement, Disney would be "under a microscope" to show improvement even with a win.

Shares of Disney fell 1.8 percent in afternoon trading.