Disney Pacts With Investor ValueAct to Help in Proxy Fight Against Nelson Peltz

Blackwells Capital has also nominated Jessica Schell, Craig Hatkoff and Leah Solivan for election to Disney’s board

Bob Iger at the 2023 Sun Valley conference.
Getty Images

The Walt Disney Co. says it has entered into an “information sharing” deal with investor ValueAct Capital, and has secured the support of Blackwells Capital to nominate three candidates to help in its proxy battle against Nelson Peltz’s Trian Fund Management.

ValueAct Capital, which reportedly began building a stake in the entertainment giant during the Writers’ Guild of America and SAG-AFTRA strikes, has entered into a confidentiality agreement with Disney that will allow the firm to consult on strategic matters, including through meetings with its board of directors and management. ValueAct also said it would support the Disney board’s recommended slate of nominees for election at its 2024 annual meeting.

“Disney is the world’s leading entertainment company. It has the best intellectual property, sports brand and parks & experiences assets in the industry. As legacy technologies transition to digital platforms, we believe Disney can lead the media industry forward,” ValueAct Capital co-CEO and chief investment officer Mason Morfit said in a statement. “We could not be more excited to partner with Bob and the Board to help create long-term sustainable shareholder value.”

“ValueAct Capital has a track record of collaboration and cooperation with the companies it invests in, and its Co-CEO Mason Morfit has been very constructive in the conversations we’ve had over the past year,” Disney CEO Bob Iger added. “We welcome their input as long-term shareholders.”

Additionally, Blackwells Capital has nominated former Warner Bros. and NBCUniversal executive Jessica Schell, Tribeca Film Festival co-founder Craig Hatkoff and TaskRabbit founder Leah Solivan.

The firm touted Schell’s experience in entertainment, technology and retail and expertise in content distribution, Hatkoff”s experience in real estate M&A and film, and Solivan’s experience as a venture capitalist and technology expert, leading funds that invest in consumer, SaaS and infrastructure companies. 

Disney’s governance and nominating committee will review Blackwells’ nominees and provide a recommendation to the board as part of its governance process. The company’s annual meeting is expected to take place in the spring.

In February, Peltz dropped a previous proxy fight after Disney announced plan to cut $5.5 billion in costs, which has since included 7,000 layoffs, removing select content from its streaming services and producing a lower volume of content. Iger proceeded to up that target by another $2 billion during Disney’s fourth quarter earnings call in November.

But now, Peltz and Trian argue that Disney’s turnaround “does not appear to be materializing,” citing tens of billions in shareholder value lost, a meaningful drop in consensus EPS estimates for fiscal years 2024 and 2025 and studio content that “continues to disappoint consumers, slowing the speed of the flywheel and threatening future earnings growth.” More generally, Trian said that Disney “appears no closer to adequately addressing the compensation misalignment, governance, and succession issues that have plagued the Company for decades.”

“The root cause of Disney’s underperformance, in our view, is a Board that is too closely connected to a long-tenured CEO and too disconnected from shareholders’ interests,” Trian added. “The Board, we believe, lacks objectivity as well as focus, alignment, and accountability.”

Trian has nominated Peltz and former Disney chief financial officer Jay Rasulo for election to the company’s board.

In a statement, Blackwells slammed Peltz’s “ego-driven” proxy battle and said he and Rasulo (who they characterize as a “disgruntled former employee”) lack the skillsets Trian claims the board lacks.

“We believe Mr. Peltz’s latest effort is driven by animus against Mr. Iger, and an ego-driven urge to claim credit for a transformation already underway,” Blackwells said. “Flip-flopping, self-interest and personal quarrels have no place in a Boardroom. Individuals seeking to gain representation on Disney’s Board must have skillsets that the Board needs as well as a demonstrable record of creating value for all stakeholders.  Mr. Peltz and his coterie seem to fail that test, time and time again.”

Additionally, Blackwells penned a letter to Disney’s board formally requesting an investigation into Peltz and Trian’s relationship with the investment firm Ancora Holdings, which has publicly expressed support for Peltz’s proxy fight, and former Marvel Entertainment chairman Ike Perlmutter, who was fired from the company in March and granted Trian sole voting power over his Disney shares.

Blackwells argued that any alliances with Trian would be material information that Disney shareholders need to cast informed votes and must be disclosed under the company’s bylaws. Disney has said Peltz’s latest effort to obtain board seats for Trian is rooted in Perlmutter’s “longstanding personal agenda” against Iger, while Blackwells believes that Ancora has had a “pattern of questionable business dealings, including a run-in with the SEC” and that its CEO Fred DiSanto “seems to have a personal agenda as well.”

Trian and Peltz have an approximately $3 billion beneficial ownership stake in Disney.

According to a 13D filed with the U.S. Securities and Exchange Commission, the firm upped its Disney stake to 7.3 million shares during the third quarter of 2023, compared to 6.42 million shares during the second quarter. The filing also discloses another 25.57 million Disney shares listed as an “other investment discretion.”

“Trian welcomes other shareholders attempting to help fix this iconic but wayward company,” a spokesperson told TheWrap. “We believe long suffering Disney shareholders need Nelson Peltz and Jay Rasulo as independent voices and catalysts for much needed change on what’s been a chronically underperforming Board.”

Blackwells Capital chief investment officer Jason Aintabi said the firm is “gratified” Trian sees the merit of its nominees “given they are independent, have the relevant experience and present themselves without an agenda.”

“Our view remains that Disney shareholders do not need Nelson Peltz or Jay Rasulo on the board,” Aintabi said. “If anyone is needed it’s the Blackwells’ nominees.”

Additionally, Aintabi said that Disney and ValueAct Capital’s agreement is a “disappointing defensive move” that “does not solve for anything.” 

“Bringing all shareholders a real and better choice for directors is the necessary act that will support the future success of Disney,” he added. 

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