Nelson Peltz Wins Key Endorsement in Disney Battle
Proxy-advisory firm ISS urges shareholders to vote in favor of adding the activist investor to the entertainment giant’s board
Nelson Peltz notched a big victory in his proxy fight with Disney DIS 0.04%increase; green up pointing triangle.
Institutional Shareholder Services, the influential proxy-advisory firm, recommended Thursday that Disney shareholders vote to add Peltz to its board.
ISS recommended shareholders support all but one of Disney’s nominees and didn’t endorse the other one put forward by Peltz’s Trian Partners, former Disney finance chief Jay Rasulo, according to a 34-page report the proxy firm sent to investors.
It also recommended voting against three nominees put forth by a smaller activist investor, Blackwells Capital.
The other major proxy adviser, Glass Lewis, came out in favor of all of Disney’s nominees earlier this week.
The mixed results highlight the uncertain outcome of the biggest proxy fight in years, which will be settled at Disney’s annual shareholder meeting on April 3.
Proxy advisers’ recommendations can have major sway over director elections, with many institutional shareholders taking their cue from them.
A 2023 report from Barclays found that 75% of nominees backed by ISS get elected.
Trian argues that it can help “restore the magic” after Disney’s financial results deteriorated in recent years and that the company should put clearer chief-executive succession plans in place, improve the guest experience at theme parks and explore shrinking Hulu, among other things.
ISS argued that adding Peltz to Disney’s board could help with succession planning. Bob Iger returned to the top job at Disney in 2022 after his successor, Bob Chapek, was ousted—and just as Peltz was beginning to amass a stake. Iger had stepped down as CEO and named Chapek as his successor two years earlier.
“Dissident nominee Peltz, as a significant shareholder, could be additive to the succession process, providing assurance to other investors that the board is properly engaged this time around. He could also help evaluate future capital allocation decisions,” ISS wrote.
Disney said Thursday that it disagrees with ISS’s recommendation that investors vote for Peltz.
Disney has said it established a committee to help pick its next CEO, while Iger has agreed to stay on through 2026. The company has made several other big moves since the proxy fight got under way that were met with enthusiasm from shareholders. They include an investment in “Fortnite” maker Epic Games, plans to stream Taylor Swift’s Eras Tour concert movie on Disney+ and a partnership with Fox and Warner Bros. Discovery to launch a sports-focused streaming service.
Disney shares are up nearly 30% so far this year, though they are still down sharply from a 2021 high.
ISS argues that while it believes Iger is the right leader for Disney at the moment, “there are lingering questions about the board’s ability to properly oversee the next CEO transition, whether it happens in 2026 or in later years, and the significant strategic changes the company is undertaking.”
Disney itself has received a flurry of support: “Star Wars” creator George Lucas, one of the company’s biggest individual shareholders, came out in favor of the company earlier this week. The company also has backing from Disney family members; JPMorgan Chase CEO Jamie Dimon, whose bank is defending Disney in the fight; and hedge fund ValueAct Capital.
Individual investors control more than one-third of Disney’s stock, more than is typical for a public company. That could work in Disney’s favor given that individual investors tend to support companies, if they turn up to vote at all.