Walt Disney’s Proxy Tug of War Pulls Shares to 52-Week Highs

The Walt Disney Co. DIS shares have been surging to 52-week highs, but not necessarily due to material improvements in operations. There is a proxy war being undertaken between billionaire activist investor Nelson Peltz of the Trian Fund and the Walt Disney CEO Bob Iger. The battle boils down to control of the Board of Directors as shareholders vote at the investor meeting on April 3, 2024.

How Did The Proxy War Emerge?

Nelson Peltz’s Trian Group owns over $3.5 billion of Disney stock. Peltz has spoken out against the Board of Directors whom he says is responsible for the woeful underperformance of the stock and operations. Peltz is fighting for two board seats. Peltz argues the board is not truly engaged and needs to take accountability. Trian started #RestoreTheMagic, stating, “…the root cause of underperformance is the Board’s lack of focus, alignment and accountability.”

The White Paper Against Disney

Peltz has noted the change in culture at the company and his distaste for the direction of the company, which has been anchored in “woke” culture that has replaced many of its iconic characters, leading to box office disasters like The Marvels and Haunted Mansion. In a nutshell, Peltz feels Disney has lost its way and traditional values, pandering to a message of diversity and inclusion.

On March 4, 2024, Trian released a 133-page white paper, “White Paper: Trian’s Case for Change at Disney”, detailing Peltz’s plan to turn around the company, which includes performance-based compensation with shareholder value, reaching 15% to 20% margin and replacing its CEO.

Trian Group Nominates 2 Board Members

In a letter to shareholders, Trian Group put out a statement, “To help ensure a better future for this great company, we believe Disney needs new independent directors who have a shareholder mindset, deep and relevant experience and a sense of urgency. We have nominated two such candidates, Nelson Peltz and Jay Rasulo, who have invested their own money in Disney stock and are dedicated to helping Disney.”

A History of Board Participation

Nelson Peltz has had a history of taking control of Board Seats influencing companies mostly for the better for shareholders and customers. He is the Chairman of the Board for The Wendy’s Co. WEN. He succeeded in taking a seat at The Proctor & Gamble Co. PG and Kraft Heinz and turning the stock around. Peltz has board positions in up to 20 other companies, schools, civic organizations and museums. Peltz has commented that the battle is not about Bob Iger but board oversight.

A Turnaround in the Works?

The day after Trian’s White Paper was released, Disney stated it would exceed guidance expectations at a