Blackwells Capital is calling on Disney to meet with its three board nominees in an effort to “promote the free-flowing exchange of ideas that comes with constructive collaboration.”
The activist investor, which filed a preliminary proxy statement with the U.S. Securities and Exchange Commission last week, has nominated former Warner Bros. and NBCUniversal executive Jessica Schell, Tribeca Film Festival co-founder Craig Hatkoff and TaskRabbit founder Leah Solivan to stand for election at Disney’s 2024 annual meeting. In addition, Blackwells has proposed increasing the size of Disney’s board to reinstate any incumbent director outvoted by its nominees.
In a statement on Monday, the firm noted that its “highly qualified” candidates are in a position to support Disney’s transformation efforts, “adding expertise that is demonstrably lacking, while making sure the Disney Board doesn’t become a forum for personal grievances and reckless behavior.” Blackwells also argues that Disney’s own proxy statement “paints a picture of a Board focused less on transforming the Company and more on preventing contrarian viewpoints and expertise from entering the boardroom.”
“In listening to the views of Disney shareholders since the time of Blackwells’ first public engagement on Disney late last year, there has been an increasing desire by shareholders for additional support to Disney’s Board, provided it consists of additive expertise and constructive collaboration with existing Board members,” Blackwells chief investment officer Jason Aintabi said. “The Disney Board has no shortage of issues to resolve, or courses to chart during this transformative time. Additional expertise should be welcomed, not brushed aside.”
In its own proxy statement filed last week, Disney rejected Blackwells’ nominees.
The board said Hatkoff had no experience with large, public media entertainment companies, nor with consumer-facing businesses like theme parks, cruises and experiences, citing experience primarily in real estate and financial investment businesses.
Schell, the board added, has no experience as a director of a public or operating company and would not be considered an independent director under the New York Stock Exchange’s rules nor the company’s corporate governance guidelines, citing her brother and entities he’s affiliated with having “ongoing contractual business relationships with the Company.”
It also said Solivan has never served as a director on any company board and “does not contribute to the skill sets that are directly relevant to the Company’s businesses and strategic objectives.”
Additionally, Disney shot down the proposal to increase the size of the board, noting that “overriding the results of an election of directors would not be in the best interests of the Company and our shareholders.”
Disney has recommended that shareholders vote for its 12 board nominees, who reflect an “ongoing commitment to a strong Board focused on the longterm performance of the company, strategic growth initiatives, the succession planning process and increasing shareholder value.” Its slate includes Disney CEO Bob Iger, Mary Barra, Safra Catz, Amy Chang, Carolyn Everson, Michael Froman, Maria Elena, Lagomasino, Calvin McDonald, Mark Parker and Derica Rice, as well as recent appointees James Gorman and Jeremy Darroch.
Blackwells, which has publicly thrown its support behind Disney’s turnaround effort, has previously called on activist investor Nelson Peltz and his firm Trian Fund Management to drop their “ego-driven” proxy war for two board seats.
Peltz and Trian, who filed their own proxy statement last week calling on Disney to “restore the magic,” have issued several goals for the company, including completing a successful CEO succession, aligning management pay with performance and targeting and achieving Netflix-like profit margins of 15-20% by fiscal year 2027. Peltz and Trian will release a full presentation to shareholders in the coming weeks.
In Monday’s statement, Aintabi pointed out that Peltz has met with Disney’s board “no less than 24 times in the last year and a half” and blasted him for not offering a single strategic idea that would benefit shareholders.
“Astoundingly, Mr. Peltz recently claimed that he would like ‘a guy who doesn’t have media experience’ on the Disney Board,” Aintabi continued. “We remind Mr. Peltz that Disney is a significant media company and, now more than any time in its history, needs Board members with deep media experience. Blackwells’ nominee, Jessica Schell, has more media experience than the Trian nominees combined, and would bring a critical perspective that is missing from the Disney Board.”
Trian, which has nominated Peltz and former Disney chief financial officer Jay Rasulo, beneficially owns $3 billion of its stock – the majority of which come in the form of shares from former Marvel Entertainment chairman Ike Perlmutter. Blackwells extended an invite to Perlmutter on Monday to engage with the company’s investment thesis and meet with its nominees.
“Mr. Perlmutter can then consider that our nominees will provide critical support in the areas of media and content, technology and real estate – the latter of which we believe represents up to 50% of the entire market value of Disney, and where, underwhelmingly, Disney has no such expertise on its Board,” Aintabi added. “Additionally, with unprecedented innovation in AI, VR and AR, and more, Disney will benefit from Ms. Solivan’s experience in these fields, which is underrepresented on the current Disney Board.”
In addition to Blackwells, the House of Mouse has received support from ValueAct Capital, which struck an information sharing agreement that will allow the firm to confidentially consult on strategic matters with Disney’s board and management. Aintabi has called the pact a “disappointing defensive move” that “does not solve for anything.”
“Showering one shareholder with information that is withheld from all other shareholders, will only make matters worse,” Aintabi said Monday. “We therefore also demand that Disney agree to make public all information that is shared with ValueAct under the so-called ‘information sharing agreement’.”
Shares of Disney, which are up 4.8% year to date but down 10% in the past year, closed at $95.08 apiece on Monday.
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