Nelson Peltz Boosts Disney Stake, Seeks Board Seats
Activist’s Trian Fund Management has accumulated stake worth more than $2.5 billion
Nelson Peltz is planning a fresh push for board seats at Disney DIS 2.64%increase; green up pointing triangle following a relentless slide in the entertainment giant’s shares.
The activist investor’s Trian Fund Management, now one of Disney’s largest investors with a stake worth upward of $2.5 billion, is expected to request multiple seats—including one for Peltz, according to people familiar with the matter.
If the company says no, Trian could nominate directors that would be voted on at Disney’s annual meeting next spring. The window for shareholder nominations runs from Dec. 5 through Jan. 4, according to Disney’s proxy materials.
Peltz launched a run for a seat on Disney’s board earlier this year after the company privately rebuffed his request to become a director. It was a short-lived battle, however, with Peltz withdrawing his nomination in February after Disney unveiled a broad reorganization and cost-cutting plan that sent the stock up briefly.
Since then, Disney shares have tumbled from higher than $113 to around $80, brushing up against their lowest level in a decade. In early 2021, after Disney notched several quarters of meteoric growth in sign-ups to its flagship Disney+ streaming service, its shares traded at around $200.
Disney has lately been grappling with Hollywood strikes that froze television and film production, a high-profile battle over fees with large cable operator Charter Communications and the prospect of sustained losses in its TV and streaming businesses.
Trian thinks that Disney shares are significantly undervalued today and that the company needs a board that is more focused, aligned with shareholders and accountable, people familiar with the matter said.
Trian has built up its stake in recent months to more than 30 million shares, a significant jump from the roughly 6.4 million shares it held at the end of the second quarter.
Trian, an influential activist investor co-founded by Peltz, had in its first fight been pushing Disney to plan for a successor to Chief Executive Bob Iger, who had held that role since 2005 before passing the reins to Bob Chapek in 2020. Last year, just as Peltz was kicking off his campaign, Chapek was fired by the board and Iger was brought back. Iger recently agreed to stay in his position through 2026.
Trian also argued that Disney had excessive compensation and lacked expense discipline.
Disney at the time said it continually refreshes its board, with a focus on directors with industry experience, and argued that Peltz didn’t understand the media industry. The company also launched a succession-planning committee to advise on Iger’s replacement.
When Peltz called off his fight with Disney in February, he told The Wall Street Journal that Iger needed to execute on his promises.
Iger has been taking steps to reverse the stock decline, some geared toward achieving profitability for Disney’s streaming segment by September of next year, a target set forth in late 2020. In August, the company unveiled a round of major price increases for its streaming products, raising the cost of the ad-free versions of Disney+ and Hulu by more than 20% each.
The company has also said recently that a plan to restore its cash dividend by the end of 2023 was on track. The payout was eliminated during the Covid-19 pandemic.
And Disney last month vowed to spend about $60 billion to expand its theme parks, cruise lines and resorts over the next decade, almost doubling its investment in a division that provides its primary source of profits.
In July, Iger said that Disney’s traditional cable and network television assets, which include ABC, sports network ESPN, FX, the Disney Channel and others, “may not be core,” indicating that the networks might be for sale. He said that ESPN would seek an investment from a strategic partner.
Two months later, Disney announced that it was partnering with gambling company Penn Entertainment to launch ESPN Bet, a sports-wagering app. Neither move caused more than a brief increase in the share price, and Disney’s 2½-year stock decline accelerated through the end of the summer.
Meanwhile, Disney is in the midst of exploring strategic options for its Star India business, whose fortunes have soured in recent months after losing a key bidding war, the Journal previously reported.
Trian, like other activists, is known for encouraging changes at the companies it targets such as a breakup or the sale of underperforming divisions or moves to improve efficiency and better use capital.
Peltz has previously served on the boards of other consumer-facing companies including Oreo maker Mondelez International, Kraft Heinz and, more recently, Unilever, the maker of Dove soap and Hellmann’s mayonnaise.