Disney CEO Bog Iger faces a proxy fight from activist investor Nelson Peltz
Walt Disney was beginning to steel itself against a challenge from activist investor Nelson Peltz, who nominated himself to the board of directors in what could become a very public debate about Chief Executive Officer Bob Iger’s leadership.
Mark Parker, Nike Inc.’s chief executive officer, will succeed Susan Arnold, who is stepping down at the company’s next annual meeting, Disney said Wednesday. Parker will also chair a new succession planning committee to advise Iger, who has been criticized for not finding a replacement.
Disney said it rejected a proposal by Trian Partners LP von Peltz to appoint its leader to the board, but “remains open to constructive engagement and ideas that help increase shareholder value.”
The moves pit one of America’s most notorious activist investors against one of the media’s most revered CEOs. Peltz is known for working his way onto the boards of companies like Mondelez International and Procter & Gamble Co. to make them more efficient, sometimes getting his way through tough proxy battles. Even when unsuccessful, as in a campaign to bring candidates from Trian to DuPont’s board of directors, his campaigns have resulted in management changes and cost cutting.
In a scathing statement, Trian — which holds a $900 million stake in Disney — noted that the stock is near an eight-year low, which is a reflection of what it calls failed succession planning, “over-the-top” compensation practices, and a lack of cost discipline . Among the problems, Trian said Disney overpaid when it bought Fox’s entertainment assets for $71 billion in 2019.
“Disney’s recent performance reflects the harsh truth that it is a company in crisis,” said Trian.
While the investor called Disney’s troubles self-inflicted, Trian said it wasn’t about removing Iger or breaking up the company. Instead, Peltz advocates deleveraging Disney and restoring the company’s dividend through 2025. The company launched a website, Restore the Magic, to spread its message.
The fight is an unusual rebuke from Iger, who became one of the media’s most popular CEOs when he first ran Disney between 2005 and 2020. He repeatedly delayed his resignation as he struggled to appoint a successor, and several candidates viewed as possible successors left the company. Iger eventually passed the title to Bob Chapek just before the Covid-19 pandemic turned into a major crisis in the US.
Last year, Disney’s board of directors renewed Chapek’s contract, even after a series of high-profile missteps, including a public row with the Florida governor. Just five months later, the board fired Chapek and reinstated Iger, in what analysts and corporate governance experts saw as a sign of poor succession planning.
In its statement, Disney said it has spoken to Peltz several times about his nomination and other changes he is seeking to make to the company’s charter. The company remains on the board against his appointment.
Disney also noted that under Iger’s previous tenure, the stock is up 554%, outperforming the market. Iger has taken “decisive steps” to realign the company’s traditional TV and streaming business, the company said. Disney’s direct-to-consumer unit posted a $1.47 billion loss in Chapek’s most recent quarter as CEO.
Arnold was the first woman to serve as the entertainment giant’s chairwoman. The former chief executive of Procter & Gamble Co. has been a director since 2007 and was appointed chairman after Iger, now 71, retired in December 2021.
Disney said Arnold has reached the board’s 15-year term limit for directors. The annual meeting that will mark the end of their term has not yet been set.
The company’s stock is up 10.9% this year through the close on Wednesday. It rose 1.4% in after-hours trading.
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