A former Disney exec has joined forces against CEO Bob Iger in an attempt to right the ship at Disney, but his efforts are more akin to the lead-up to a hostile takeover of the company instead.
In a battle that originally began in November 2022, billionaire activist investor Nelson Peltz has returned in an attempt–yet again–to usurp power from Disney CEO Bob Iger and the board, as he admits he’s lost confidence in the boomerang CEO‘s abilities to do right by Disney’s shareholders. It’s not the first time Peltz has attempted to sway other investors to allow him to speak on their behalf by means of a proxy vote.
This time around, however, the stakes are much higher, and Peltz is heavily armed for battle against Disney’s CEO.
Who the Heck is Nelson Peltz?
As a teenager, now-billionaire businessman Nelson Peltz dreamed of becoming a ski instructor in Oregon, but life had other plans for him. Over the course of his career, which began in the 1960s with his first job as a delivery truck driver for a food distribution company founded by his grandfather, he enjoyed success after success in a variety of endeavors.
In 2005, Peltz, along with partners Peter May and Edward Garden, founded Trian Fund Management, also called the Trian Group or Trian Partners, an investment management fund based in New York, and since then, he has worked to amass his fortune by buying up large stakes in companies that are undervalued.
Once he establishes himself as a shareholder, Peltz then lobbies for the changes he believes will be in the best interest of the shareholder, such as increased dividends, changes in management, and cost-cutting to increase shareholder value and increase the profitability of the enterprise. Occasionally, Peltz suggests the total dissolution of a company.
Disney isn’t the first company on which Peltz has set his sights. Over the years, he has successfully won a board seat at companies like the Wendy’s Corporation, Sysco, and the Madison Square Garden Company. He’s also a major investor in Cadbury, the Heinz Corporation, Kraft Foods, PepsiCo, and others.
As he did last year, Peltz has his eyes on a seat at the table with The Walt Disney Company‘s board, but this time around, he’s looking for more than one chair.
A Former Exec Scorned by Disney
Adding to Peltz’s arsenal in his battle to secure a proxy vote and a seat on Disney’s board are the votes that come with 33 million shares of Disney stock–many of which belong to a former Disney exec who has handed off his votes to Peltz and Trian Partners.
Ike Perlmutter has joined forces with Nelson Peltz yet again, though he has no interest in a seat on Disney’s board. In 2001, Perlmutter became Marvel’s vice chairman, and four years later, in January 2005, he became the chief executive officer at Marvel Comics. After Disney’s acquisition of Marvel in December 2009, Perlmutter stayed on as CEO of Marvel Entertainment.
In March 2023, however, Perlmutter, 80, was laid off. In a phone call, the former exec was told that the small division he oversaw, which was largely centered on consumer products and was run independently of Marvel Studios, was “redundant” and would therefore be swallowed up by other larger units at Disney, so his role was no longer necessary.
Disney included Perlmutter’s removal in several rounds of layoffs that ultimately left 7,000 Disney Company employees without jobs. The layoffs were part of CEO Bob Iger’s $5.5 billion cost-cutting initiative, first announced during the company’s first-quarter earnings call in February. Perlmutter, however, says he was fired for complaining about the exorbitant expenses involved in making Marvel films.
Perlmutter had made a name for himself–as an “irascible and unrelenting executive,” per The New York Times, and had long been considered a distraction at Disney. In the months preceding his termination, Perlmutter had made it his role to push for Peltz to get a seat on the board at the Mouse House, contacting board members and senior executives numerous times between August and November 2022 in an attempt to persuade them to extend to Peltz a spot on the board.
When Perlmutter’s efforts proved fruitless, Peltz began a proxy battle, promising his influence on the board would allow for the revamping of Disney’s streaming business and the cutting of more costs.
Perlmutter Hands Over His Votes
Following Perlmutter’s move, Trian Partners has now gained the sole voting power associated with 33 million shares worth approximately $2.5 billion. Many of those shares belong to the former Disney exec.
“While I was a Disney employee, I was not comfortable publicly stating my views on the company and its performance,” Perlmutter said in an interview with the Wall Street Journal. “As someone with a large economic interest in Disney’s success, I can no longer watch the business underachieve its great potential.”
Disney’s Plummeting Stock Price
Disney’s shameful stock price has been the topic of discussion across various media outlet broadcasts and cable news shows and has been the subject of countless articles on financial planning websites. Walt Disney Company shares reached an all-time high at more than $191 per share in March 2021. On Wednesday, the stock closed at $81.07. Overall, Disney’s stock price is approaching nine-year lows.
To right this wrong, Peltz and Perlmutter want to see The Walt Disney Company take further initiatives to cut spending, including the reduction of executives’ salaries. They also intend to have additional Trian partners on the board at Disney.
History Repeats Itself
Last year during Peltz’s attempt to secure a seat on Disney’s board, Bob Chapek was CEO, as well as one of Peltz’s allies. Trian Partners invested approximately $500 million, accumulating nearly nine million shares of Disney stock. But before Peltz could take further steps to accomplish his goals, Disney removed Chapek from his post and reinstated former CEO Bob Iger at the helm. But Peltz didn’t disappear immediately.
He continued his campaign for a proxy battle until February 2023, when Bob Iger unveiled plans for a restructuring at Disney that would cut more than $5 billion in costs and require the layoffs of 7,000 Disney employees.
Peltz acknowledged that “the proxy fight is over,” but he also declared that he’d keep his eyes on CEO Bob Iger in his second term to see how the veteran CEO handles Disney’s financial woes. In light of recent events, however, it appears that any olive branches once extended by Peltz have been pulled back, and Peltz is more determined than ever to garner a seat among Disney’s decision-makers, especially as Perlmutter is putting his money where Peltz’s mouth is.