Disney Proxy Battle Continues as Nelson Peltz Shifts Blame to Board of Directors in Open Letter

The activist investor says the entertainment giant needs new leadership to restore shareholder value

Nelson Peltz and guests attends Day 4 of American Express Presents CARBONE Beach
Nelson Peltz (Romain Maurice/Getty Images)

Activist investor Nelson Peltz has named his target in his attempt to get a seat on Disney’s board.

Peltz, CEO of Trian Fund Management, is asking Disney shareholders to vote him onto the seat held since 2018 by Mastercard executive Michael B.G. Froman.

Peltz submitted a proxy statement asking shareholders to withhold their votes for Froman and instead vote for him to take a role in directing the House of Mouse’s future.

Trian, which owns about 9.4 million shares of Disney, is campaigning to “Restore the Magic” through the proxy fight, following a multiyear decline in the stock price.

But in an open letter to shareholders accompanying the proxy, Trian noted that Disney lost over $120 billion in market value in 2022 as its shares slumped 44%, and that earnings per share have declined by 50% since 2018 despite a 41% leap in revenue as costs have “ballooned,” leading Disney to eliminate its dividend, which it had paid for 57 straight years.

“We love Disney. But we believe that all is not well at The Walt Disney Company. Shareholders have suffered a lot as a result,” the letter says.

The letter also charges that the current board has failed to instill a “culture of accountability,” by overpaying executives even as the business has performed poorly; failing to align incentives with shareholders by personally owning stock and failing to heed “constructive shareholder input.”

Disney opposes Peltz’s efforts and last month met his initial efforts with derision. In a presentation following the activist investor’s initial foray, Disney argued that Peltz “does not understand Disney’s businesses, and lacks the skills and experience to assist the board in delivering shareholder value in a rapidly shifting media ecosystem.”

It has recommended shareholders vote for Froman to remain on the board.

It also reduced the size of the board to 11 members from 12 after Peltz started his campaign.

It’s not clear why Peltz is targeting Froman, the vice chairman and president for strategic growth at Mastercard, who also once served as the US Trade Representative to the President and is a former Citigroup executive.

Disney’s board brought longtime CEO Bob Iger back to lead the company in a surprise move in November, supporting another charge from Peltz: that the board failed to “properly plan for leadership succession by leaving the company unprepared to pivot to the next generation of executives when the need for change was evident.”

The letter said that as a large Disney shareholder, Trian “cannot sit idly by.”

“Disney’s executives and directors do not want Nelson in the boardroom,” the letter said. “Based on our experience, we believe they don’t want to be challenged, answer hard questions or have robust debates. They prefer the status quo.”

Peltz promised to develop a plan for turning Disney’s streaming business into “the leader in streaming,” repair the company’s balance sheet and undertake concerted efforts “to develop internal talent, plan for succession several layers down into the organization and foster a new generation of leaders.”

Disney shares on Thursday gained $3.14, or 3%, to trade $112.70 at midday. The stock has gained 34% since hitting its recent low of $84.07 on Dec. 28. The S&P 500 rose about 11% during that time.