Disney proxy fight heats up with the latest Nelson Peltz move

Walt Disney Co. has rushed to defend a board member who is now a target of activist shareholder Nelson Peltz amid his high-profile campaign for influence at entertainment giant Burbank.

On Thursday, Peltz’s hedge fund, Trian Fund Management, urged Disney shareholders to bring in board member Michael BG Froman to make room for Peltz on the Disney board.

In a letter to Disney investors, Trian said it was “material” that shareholders vote for Peltz and disapprove Froman by voting to “withhold” support for Froman’s re-election. “Failing to hold Michael BG Froman ‘WITHHOLD’ could jeopardize the goal of electing Nelson Peltz to the board,” the Trian letter to Disney shareholders said.

But in its own letter, Disney encouraged shareholders to reject Trian’s proposal.

“Your board does not support Mr. Peltz (or his son) as a candidate and believes his election would jeopardize our efforts to lead Disney for all shareholders,” the company said. “In more than six months working with Mr. Peltz… he has shown that he does not understand Disney’s businesses and lacks the perspective and experience to contribute to the goal of delivering shareholder value in a rapidly changing media ecosystem.”

Peltz’s aggressive campaign to shake up Disney’s board of directors comes less than three months after CEO Bob Iger returned to the legendary company to restore stability and its creative footing. Iger now has to deal with numerous bushfires that have erupted over the past three years, including refining Disney’s streaming strategy by focusing on profits rather than just subscriber growth. Iger has also dismantled the organizational structure imposed by Disney’s former boss Bob Chapek, whose less than three-year tenure was viewed as a disappointment.

Before leaving the company at the end of 2021, Iger shaped the board.

President Barack Obama speaks with US Trade Representative Michael Froman in Peru in 2016.

(Pablo Martinez Monsivais / AP)

Froman, a classmate of former President Barack Obama at Harvard Law School, has served on Disney’s board of directors since 2018. He served as a US Trade Representative during the second term of the Obama administration. Previously, he was Deputy National Security Advisor for International Economic Affairs during Obama’s first term.

Froman has served as Vice Chairman and President of Strategic Growth at Mastercard Inc. since 2018. Before joining the Obama administration, Froman worked at banking giant Citigroup for a decade. Earlier in his career, Froman worked in the Clinton White House.

Disney described Froman as “a valued director with extensive knowledge of global trade and international business who, in the board’s belief, is far better qualified than Mr. Peltz or his son to contribute to shareholder value creation.”

“Mr. Froman’s decades of experience in business and international affairs is critical in helping Disney assess the risks and opportunities in an increasingly complex global marketplace as it strategically focuses on growing its customer base globally and innovating in changing markets” , Disney said in a statement.

The company cited its experience in “issues affecting the digital economy, the use and protection of data, and intellectual property rights, all of which are critical to Disney’s business.”

Peltz, 80, has been meeting with Disney executives and board members for months in hopes of landing a seat on the Burbank-based entertainment giant’s board of directors, but his offers have been repeatedly turned down. His next step is to try to be elected by Disney shareholders, who will be voting at the company’s upcoming annual meeting. A date has not been announced.

Peltz, known for proxy fights with companies like Procter & Gamble, recently revealed his efforts to win a seat on the board and pressure Disney, given what he calls the company’s “self-inflicted” problems to correct its poor stock performance. He listed his complaints on a website called RestoretheMagic.com.

Disney Chairwoman Susan Arnold recently announced that she will be stepping down following the company’s board election this spring. Mark Parker, a former Nike CEO who currently serves on the board, will replace her. If Arnold leaves, Disney will have 11 board members.

Disney shares have gained 20% since Iger returned. Disney shares closed down nearly 3.5% on Thursday at $113.20.

Leave a Reply

Your email address will not be published. Required fields are marked *