The stakes are raised in Disney's fight for the future
Trian Fund Management intensifies the Disney board battle, proposing Nelson Peltz and Jay Rasulo for election, marking a crucial turning point for the company's future
An influential activist investor is intensifying his fight over the direction of Disney in a long-standing disagreement with CEO Bob Iger and the company's leadership, seeking to secure two seats on Disney's board.
Trian Fund Management announced on Thursday its intention to nominate Nelson Peltz, the company's founder, and Jay Rasulo, a former Disney chief financial officer, for election to Disney's board. This latest move comes after Trian's unsuccessful attempt in November to gain seats on Disney's board, reigniting their ongoing dispute from earlier in the year.
Disney has faced significant challenges in the past year, including a high number of unsuccessful projects, a decrease in movie and traditional TV viewership, and substantial losses in its streaming business. Peltz is seeking a major transformation. "As Disney's primary active shareholder, we cannot simply watch as the current directors and their selected replacements obstruct essential changes, while peers and rivals consistently outperform," stated Peltz, Trians' CEO. "It is long overdue for a shareholder-led board overhaul, with directors who are dedicated and accountable to the company's owners."
Disney shares rose 1.5% Wednesday midday.
The company pushed back against Peltz and Trian in the past but said it would review the proposeal.
Disney responded to Trian's nominations by stating that it has a well-qualified and diverse Board. The Governance and Nominating Committee will review the proposed Trian nominees and make a recommendation to the Board as part of its governance process. Trian expressed the belief that Disney's performance is affected by a Board that is too closely connected to a long-tenured CEO and too disconnected from shareholders' interests.
The firm expressed approval of the appointment of Morgan Stanley CEO James Gorman and former Sky CEO Jeremy Darroch as directors to achieve "objectivity" on Disney's board, but considers it to be an insufficient step. Trian anticipates the next annual meeting to occur in spring 2024.
In 2022, Disney shareholders celebrated CEO Bob Iger's return to the company's leadership. However, the company has faced challenges such as declining TV revenues, disappointing box office results, and cost-cutting measures. Disney+ has also struggled as the company adjusts to the streaming era, resulting in significant financial losses. In an attempt to address this, Disney raised the monthly price of its ad-free streaming subscription to $13.99 in October, while keeping the $7.99 price for its advertising tier unchanged.
Disney anticipates its streaming division to become profitable by the end of next year, but it experienced a decline in streaming subscribers in the US and Canada last quarter. Disney has suggested that it may increase efforts to prevent password-sharing among users. Additionally, viewership at ESPN, which used to be Disney's main source of revenue, has also decreased, putting pressure on Disney to expedite its shift to streaming.
In November, Iger admitted the difficulties Disney has encountered this year during the company's annual town hall, emphasizing his commitment to constructing a new, contemporary business model for Disney.
Despite reaching a low point in November, Disney's shares have risen to around $95 each. The stock has seen a 9% increase this year, but remains significantly below its previous peak levels.
CNNs Samantha Delouya contributed to this report.
