Nelson Peltz is an American activist investor with a history of working with brands such as Wendy’s, Dupont, and Heinz. An activist investor is someone with a position in a declining stock and attempts to control operations in order to increase that stock's value, leaving with a profit. Peltz took aim at Disney in 2022 after a continued loss in shareholder value, likely caused by the new leadership of former CEO Bob Chapek. Bob Chapek took over the CEO role at Disney from 2020 to 2022. He was chosen by Bob Iger to be Iger’s successor but ultimately failed to fulfill the role.
The acting board and Iger rejected Peltz's prospect of launching a campaign to get voted in by shareholders at the next annual meeting. Peltz proposed spending cuts in areas such as labor and production, adding that Disney’s accused ‘woke’ agenda in film affected its bottom line. Iger stepped back in to counteract the proxy battle. Upon returning, Iger made cost cuts, which boosted returns and raised the stock price. Given that the price returned to a favorable level, Peltz backed off from his campaign.
In 2023, Disney had a significant drop in share price, hitting a 9-year low of $84 a share. This prompted Peltz to seek a return and launched a campaign for two seats on the board of directors. Peltz’s Trian Partners owned 32.2 million shares of Disney, making them a shareholder that needed to be taken seriously by the acting board and other shareholders. Peltz’s close associate Isaac Perlmutter from Marvel Entertainment gave Trian this position. Perlmutter was ousted by Disney once Marvel was acquired by the company and has been quoted saying he believes the termination was due to differences in opinion regarding the production of Marvel movies. He gave his stock to Trian Partners to push change at Disney through Peltz.
Within this struggle for shareholder support, Disney pointed to Peltz’s lack of media experience and strategy as grounds for rejection from the board. Disney called Peltz’s attempt to get on the board “disruptive and destructive.” Of course, Perlmutter backing Peltz adds personal vendetta to the narrative. Peltz / Trian Partners' appeal to shareholders preached cost efficiencies and reiterated concern for a 'woke' agenda at Disney that negatively impacted profits.
The current Disney board made even more effort to boost the stock price in order to earn shareholder confidence before the finalized vote on April 3, 2024. See that meeting here. The board brought on new executives such as James Gorman from Morgan Stanley Wealth Management and Jermey Dorroch, the former CEO of Sky (a European media and entertainment company). They even ramped up initiatives, investing in Epic Games, the developer of Fortnite. Their efforts resulted in profitable returns for the first quarter, growing earnings per share by 21% above what was expected.
Coming out of April’s 2024 meeting, all 12 current board members, including Bob Iger, were re-elected. Trian Partners believes that they ultimately achieved their goal of boosting the company's performance, though not directly due to their business decisions, but rather their pressure on the company. Peltz said, “We hope that this time will be the last and that the shareholders will not be let down like a year ago.” Disney will now return to focus on settling its succession plan and hopes to build off of Q1’s earnings.
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