On January 11, The Walt Disney Company announced another massive change to its leadership. Susan Arnold — Disney’s Chairperson of the Board of Directors — would be stepping down and board member Mark Parker, the former CEO of Nike, would be stepping in to take over as Chairman of the Board. The move was surprising on its face, but then we remember that Arnold had always backed up and shown faith in now-fired Disney CEO Bob Chapek. Chapek was fired in November, just three months after his contract was renewed. So, it’s possible that Arnold — Disney’s first female Chairperson — could have seen the writing on the wall.
With Arnold leaving and Parker stepping up to take her place, Disney’s Board of Directors will shrink from 12 members to 11 members. There is someone who wants to be on the Board and is willing to fight to get there. Investor Nelson Peltz — the founder of the investment management fund Trian Group — is an activist investor in Disney, and he wants to be a part of the decision-making. He feels that Disney has gone downhill and has hurt itself, and he has ideas on how to turn things around. But it seems that Disney doesn’t really want him.
During a discussion on the CNBC Show, Squawk on the Street, Peltz said that Disney made a huge mistake when it decided to purchase 21st Century Fox — a decision made under CEO Bob Iger’s leadership.
“Fox hurt this company. Fox took the dividend away. Fox turned what was once a pristine balance sheet into a mess,”
Mr. Peltz has said that he wants a seat on the board, so he can look at Disney’s numbers, help them cut costs, and see where there may be room for profitable opportunities.
Peltz’s Trian Fund Management confirmed later it had nominated Peltz to Disney’s board. Disney, Peltz said, had “lost its way resulting in a rapid deterioration in its financial performance.” Shares of the company closed Wednesday at $96.33. A year ago, Disney was trading at around $160 a share.
While Mr. Peltz may want to be a bigger player in the Walt Disney Co. family, it seems that the rest of the Disney family may not want him to have too big a voice. According to a report from CNN Business, Disney is willing to work with Peltz, but not have him on the board.
“Mr. Iger’s mandate is to use his two-year term and depth of experience in the industry to adapt the business model for the shifting media landscape, rebalancing investment with revenue opportunity while bringing a renewed focus on the creative talent that has made The Walt Disney Company the envy of the industry,” the company said in its opposition of Peltz.
“Iger has already taken decisive steps to realign content creation and distribution, and reposition Disney’s streaming platforms and linear broadcast and cable networks for enhanced profitability for the company,” Disney said in a statement.
Peltz is not one to take “no” lying down, so he is gearing up for a proxy fight with the House of Mouse, meaning that he wants the shareholders to vote on his place on the board. The Trian Group thinks that Peltz will really be able to make a big difference, as he has helped companies turn around in the past. He thinks Disney is prime for help, as its stock numbers have been struggling since Bob Chapek took over in 2020.
Per the Associated Press:
The group says recent issues facing Disney are self-inflected problems, calling out what it considers failed succession planning efforts, a flawed direct-to-consumer strategy and “over-the-top” compensation practices, among other concerns.
Trian argues that if the 80-year-old Peltz is elected to Disney’s board, he’ll look to increase transparency and accountability. The group said Peltz would focus on developing an effective succession plan, aligning compensation with performance and improving direct-to-consumer margins.
Trian and Peltz have assured Disney, its fans, and its fellow shareholders that they do not intend to change Disney, and they don’t want to replace Bob Iger — who is slated to be CEO until the end of 2024. Peltz’s position on the Board may be discussed at Disney’s Annual Shareholder meeting. A date for the Shareholder meeting has not been announced.