The Walt Disney Company responded to Nelson Peltz’s latest demands Thursday with a resounding “No.” The company released a letter in response to materials released by the Trian Group.
Peltz is now requesting that he, or his son if need be, serve on the Walt Disney board of directors instead of Mastercard executive Michael Froman. Froman has served on the board since 2018. In his statement, Peltz argued “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.”
“The Disney Board of Directors does not endorse Nelson Peltz (or his son Matthew, who is running as an alternate Mr. Peltz may swap in) as a nominee,” stated the official company response. “[Disney] believes the election of either Mr. Peltz or his son would threaten the strategic management of Disney during a period of important change in the media landscape.”
Peltz submitted a proxy statement earlier in the day asking shareholders to withhold their votes for Froman and instead vote for him. Trian owns around 9.4 million shares of Disney and is campaigning to “Restore the Magic” through the proxy fight. This follows a multiyear decline in the stock price.
“Inexplicably,” continued Disney, “Trian seeks to replace Michael Froman, a highly valued member of the Board with deep background in global trade and international business, who the Board believes is far better qualified than either Mr. Peltz or his son to help drive value for shareholders.”
The response argued that neither Mr. Peltz nor his son “offer skills or experience additive to the Disney Board that replace the decades-long experience of Mr. Froman.”
The full letter to shareholders noted Mark Parker being named Chairman of the Board following the annual 2023 Annual Shareholders Meeting while trumpeting his four decades of experience at NIKE. Disney noted that Parker will chair a newly-formed Succession Planning Committee to assist the Board in identifying and onboarding a successor for current CEO Bob Iger.
“Your Board does not endorse Mr. Peltz (or his son) as a nominee and believes that his election would threaten our efforts to manage Disney for all shareholders. Over more than six months of engagement with Mr. Peltz, in both conversations and written materials, he has demonstrated that he does not understand Disney’s businesses and he lacks the perspective and experience to contribute to the objective of delivering shareholder value in a rapidly shifting media ecosystem.”
The full Walt Disney shareholder letter can be seen below:
An activist investor, Trian Fund Management, L.P., along with other entities affiliated with Nelson Peltz, has nominated Mr. Peltz (or if he is unable to serve or for good cause will not serve, then his son Matthew) for election as a director at the upcoming Annual Meeting in opposition to the nominees recommended by your Board.
Your Board does not endorse Mr. Peltz (or his son) as a nominee and believes that his election would threaten our efforts to manage Disney for all shareholders. Over more than six months of engagement with Mr. Peltz, in both conversations and written materials, he has demonstrated that he does not understand Disney’s businesses and he lacks the perspective and experience to contribute to the objective of delivering shareholder value in a rapidly shifting media ecosystem.
If you have already received materials with a blue proxy card from the Trian Group, please simply discard them and do not vote at this time.
Your company’s proxy materials will be mailed soon, including the WHITE card with voting instructions. Your vote FOR our nominees on the WHITE card will be especially important at this year’s upcoming Annual Meeting.
Your Board and management team have engaged extensively with Mr. Peltz in 2022 and 2023, even before he bought any Disney stock. In fact, Mr. Peltz sought a board seat before he was a shareholder. We are skeptical of his motives and believe he would be disruptive at a crucial period for Disney.
Your independent and highly qualified Board has provided strong oversight focused on delivering sustained shareholder value. Ten of the 11 board members are independent, five have Fortune 500 CFO or CEO experience and we have strong diversity on our Board. The Board is overseeing important strategic changes that our CEO Bob Iger is executing, such as putting more decision-making into the creative teams, implementing a cost reduction plan, prioritizing streaming profitability and improving the guest experience in our parks.
Under Bob Iger’s previous tenure as CEO, the company delivered significant long-term shareholder value. From 09/30/2005 to 02/25/2020, Disney generated total shareholder return of 554%, compared to 244% for the S&P 500, as well as exceeded returns from media peers. We are pleased to have Bob back at the helm during this current period of change in our industry.
We look forward to providing you with more information regarding the Board and management team’s strategy to deliver shareholder value in today’s rapidly shifting media ecosystem and the reasons why the election of Mr. Peltz will not benefit that plan.
In the interim, we strongly urge you to simply discard and NOT to vote using any blue proxy card sent to you by the Trian Group. Please wait to vote until you can do so on a fully informed basis.
We thank you for your investment in The Walt Disney Company.
Board of Directors
The Walt Disney Company