Activist investor Nelson Peltz will try to force his way onto Walt Disney’s board after the company refused to appoint him as a director, setting the stage for one of the biggest US proxy battles in recent years.
Peltz plans to take his bid for a board seat directly to investors, putting him at odds with Bob Iger, according to people briefed on the plans, just months after returning to a second stint as chief executive of the sprawling entertainment group.
On Wednesday, Disney said it opposed giving a board seat to Peltz, head of New York-based Trian Partners, which owns a $900 million stake in the company. In an apparent attempt to preempt the impending fight, Disney has tapped Nike veteran Mark Parker as its next chair.
Parker will replace Susan Arnold, whose leadership came into question last year over the company’s management in the final months of former CEO Bob Chapek’s tenure.
Peltz’s proxy fight against Disney would be one of the biggest boardroom battles of 2018 as he moves to become a director at consumer products group Procter & Gamble.
The months-long proxy fight, in which both sides spent more than $100 million to woo shareholders, captivated Wall Street, and Peltz won by 0.002 percent before stepping down in 2021.
Trian released a 35-page report shortly after the announcement criticizing Disney’s M&A strategy, particularly its 2018 acquisition of 21st Century Fox, saying it showed “poor judgment.”
The activist fund also slammed spending inefficiencies in Disney’s streaming business, which it said has resulted in $11 billion in losses for the company to date, and called its succession planning process “broken.”
In the report, titled “Restore the Magic,” Trian laid out his vision for Disney, including calls for a successor to Iger within two years and a restoration of its dividend by 2025.
A person close to Disney criticized the Peltz plan for lacking a strategy. “It’s really surprising that there are criticisms [Trian’s presentation] but there is literally no single solution,” said the person. “Peltz has no plans.”
Disney said Arnold, the first woman to lead an entertainment group, will not stand for re-election as a director at the company’s next annual meeting because of the 15-year term limit set by the board’s tenure rules.
Iger’s tenure as chair, which began in 2021 following his resignation, has been marred by challenges brought on by the Covid-19 pandemic, which has damaged Disney’s theater and theme park businesses.
He came under investigation last summer after the company renewed Chapek’s contract following a dispute with Florida’s governor over an education law considered anti-LGBT by his opponents, only to fire him in November.
Parker, Nike’s executive chairman, has served on Disney’s board for seven years. Arnold said in a statement that Parker was “helpful [Disney] navigate effectively in times of unprecedented change”.
When Iger returned in November, he signed a two-year contract with Disney. In a statement, Parker said his top priority would be to “identify and prepare a successful CEO successor” and that the process “has already begun.”
Disney’s share price has fallen nearly 40 percent in the past year as investors have begun to question the entertainment group’s high spending on its streaming business.
The stock’s poor performance caught the attention of activist investor Daniel Loeb, who successfully pressured Disney to appoint media veteran Carolyn Everson to its board last fall.
In a statement Wednesday, Disney said its senior management and board had contacted Peltz “several times.” He said he remained “open to constructive engagement” with him but would not support his candidacy for council.
Parker spent 13 years at the helm of Nike, the world’s largest sportswear maker by revenue, during which revenue growth was marred by controversy, including an alleged “boys club” culture and a doping scandal.
Parker, a company lifer who joined as a shoe designer in 1979, became CEO in 2006 and oversaw the expansion of Nike’s online and direct-to-consumer sales. Its total revenue more than doubled in 2019 to $39.1 billion.