Disney appears to have prevailed in a high-stakes proxy battle with billionaire corporate raider Nelson Peltz’s hedge fund, Trian Fund Management. According to people familiar with the matter, the company has secured enough shareholder votes to defeat a challenge against its board mounted by the investors. As of Tuesday evening, enough votes had been cast to put Disney’s board directors Maria Elena Lagomasino and Michael Froman ahead of Trian’s two challengers, Peltz and former Disney chief financial officer Jay Rasulo. The sources said the company’s second-largest shareholder, BlackRock, also backed the current board. The final tally will be announced at Disney’s annual shareholders meeting on Wednesday afternoon.
The tussle has centered on whether Disney’s board should keep chief executive Bob Iger at the helm and implement his agenda to make the home of Mickey Mouse profitable again, revive its film and television franchises, and find partners for sports network ESPN’s digital future. Both sides have spent tens of millions of dollars trying to persuade investors to back their side.
Trian, which owns a $1 billion stake in Disney, has accused the media conglomerate of bungled succession planning and overpaying for new assets. It has pressed for adding its nominees to the board, including former Marvel Entertainment chief Ike Perlmutter and Jay Rasulo. Disney has argued that the nominees need more relevant experience and would distract the board from running the company.
If Trian’s bid to win two board seats for Peltz and Rasulo fails, it will blow the activist investor’s plans to overhaul Disney. Those efforts could include cutting the company’s debt, expanding its streaming business, and making aggressive acquisitions. It would also set back Iger’s drive to fix Disney and its brands.
Despite the fierce fight, Walt and Roy Disney’s descendants have rallied behind Iger and the current board. They have written letters to shareholders urging them to vote for the current board and reject Trian’s demands. In the letters, nine founders’ grandchildren, including Abigail Disney and Walt’s granddaughter Laurene Powell Jobs, praised Iger and his team for steering Disney out of the crisis.
But the heirs’ backing has not tipped the scales, and many investors remain unconvinced by Trian’s pitch for change. The company’s board and Iger have attracted the support of powerful allies, including the adviser firm Institutional Shareholder Services, which recommended that shareholders back the current board. Trian, meanwhile, has enlisted the help of Hollywood stars like George Lucas and billionaire philanthropist Laurene Powell Jobs to rally shareholders in his corner. It has also gained the support of significant investment funds, such as CalPERS and T. Rowe Price, which owns a 0.64% stake in the company.