Disney and CEO Iger Get Backing of Proxy-Advisory Firm Glass Lewis in Battle Over Board
Disney’s current strategic direction under CEO Bob Iger got the thumbs-up from Glass Lewis, an influential independent proxy voting and corporate governance advisory firm, amid a campaign launched by two activist investor groups to grab seats on the Mouse House’s board.
Glass Lewis, in a March 18 report, recommended Disney shareholders vote for the Disney-selected 12 director nominees — and reject those put forward by Nelson Peltz’s Trian Partners and another firm, Blackwells Capital — at the company’s annual meeting on April 3.
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Disney “is undertaking what we consider to be a credible effort to shift key operational priorities under the leadership of one of the most well-respected CEOs in the industry,” Glass Lewis said in the report, referring to Iger. “[W]e consider the subsequent 15 months [since Iger’s return as CEO] have provided management and an incrementally reconstituted board with adequate opportunity to launch a more credible succession program and develop, communicate and execute on several key initiatives which appear to reasonably target acknowledged operational and financial weaknesses at Disney.”
Glass Lewis also said, “While it remains too early to say with certainty that each of those programs will prove successful, we believe it is similarly too early to suggest there exists adequate cause for investors to support alternate solicitations which may prove significantly less accretive to Disney’s trajectory, by comparison.”
Trian — which has asserted Disney’s stock has underperformed under Iger — has been lobbying Disney investors to vote in Peltz and Jay Rasulo, former CFO at Disney, at the annual shareholders meeting. In a recent letter to Disney investors, Trian said, “Shareholders can’t afford another boom-and-bust sequel.” The hedge fund acknowledged, “After 10 years of poor performance, Disney’s stock is up in the first two months of 2024.” But Trian’s letter questioned whether the company can execute on recent announced strategic plans and said that “without the pressure of our proxy contest pushing Disney to perform, it is unclear if the ‘announcements’ would have been made.”
In its report, Glass Lewis said that “given what we believe is already a credible plan underway for Disney, we struggle to see many of Trian’s intentions as representing a likely net gain for investors.” The firm continued, “Notwithstanding faults in Disney’s prior succession initiative, Trian’s intent to launch a new process is not clearly superior to, and may be heavily duplicative of, Disney’s ongoing effort, which is already tied to a special board committee composed of members we believe to be credible.”
Blackwells Capital, which owns a relatively small number of Disney shares, and supports Iger’s leadership is urging Disney shareholders to vote for its own three candidates (Jessica Schell, a former Warner Bros. and NBCUniversal exec; Tribeca Film Festival co-founder Craig Hatkoff; and TaskRabbit founder Leah Solivan).
Disney has previously said it opposes the candidates nominated by Trian and Blackwells as lacking “the appropriate range of talent, skill, perspective and/or expertise,” and is urging shareholders to vote for its own 12 nominees.
Disney chairman Mark Parker said in a statement Monday, “We are pleased that Glass Lewis recognizes the strength of our highly qualified nominees and supports our plans to return this iconic company to a period of sustained growth and shareholder value creation. In its recommendation, Glass Lewis clearly identifies the strength of the diverse skillsets across our board nominees, the credibility of our succession planning process and recent changes to the board and compensation program and the promise of our recent efforts to bolster growth and value creation to position Disney for the future.”
Glass Lewis, in commenting on Disney’s current governance practices, succession planning efforts, and the experience and engagement of the current Disney board, said: “We note the board has demonstrated a willingness to refresh its membership in the service of shareholder responsiveness and skill reconstitution with some reasonable regularity, resulting in an average tenure of less than five years across the incumbent slate.”
Disney said in a statement: “In contrast to our highly qualified nominees and their successful track record, in our view, the alternate nominees [from Trian and Blackwells] do not bring additive skills or qualifications to the Disney board and have no unique, meaningful plan to deliver superior shareholder value.”
Disney last week issued its most forceful rebuttal to Peltz to date, in a video that called the proxy fight being waged by Trian Partners “disruptive and destructive” and said Peltz’s “quest also seems more about vanity than a belief in Disney. Why else would he sell 500,000 Disney shares over the past six months in the middle of his proxy fight?”
Disney’s March 11 video, produced in the style of a political attack ad, also says Peltz and Rasulo have teamed up with ex-Marvel chairman Ike Perlmutter, a “former disgruntled employee… who has his own lengthy record of destructive behavior inside Disney.” About 79% of the shares controlled by Trian are owned by Perlmutter. In the video, the company reiterated its assertion that Perlmutter nurses a longstanding personal grudge against Iger: “This sort of personal animus in the boardroom is more than disruptive — it can be destructive.”
Peltz’s Trian on March 4 released a lengthy white paper detailing strategic changes the hedge fund argues will improve Disney’s financial performance and boost its stock price. Among its suggestions: Disney should revamp its streaming-content strategy to take “more shots on goal”; consolidate Disney+ and Hulu operations; and produce fewer movie sequels. Trian also wants Disney’s board to “fix” the company’s “chronic succession problems” for the 73-year-old Iger, whose CEO contract expires at the end of 2026.
Regarding Trian’s white paper, Disney claims in the new video that it includes a “surprising number of questionable proposals that reinforces clear lack of experience in media” as well as several suggestions Disney is already implementing.
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