Earlier today, International Shareholder Services recommended that Disney Shareholders vote for Nelson Peltz in the upcoming Proxy Vote, with Disney issuing a response shortly thereafter.
What’s Happening:
- Proxy-advisory firm Institutional Shareholder Services has issued The Walt Disney Company a bit of a setback when they recommended that shareholders vote for Nelson Peltz and the Trian Group to join the Disney Board in the upcoming Proxy Vote early next month.
- At Disney’s 2024 annual shareholders meeting, which will be held on April 3rd, investors will vote on rival board candidate slates, made up of Disney’s own 12-member lineup, Nelson Peltz’s Trian Partners two nominees (Peltz and ex-Disney CFO Jay Rasulo) or three from investment firm Blackwells Capital.
- The ISS, whose recommendations are influential among regular investors, backed Peltz in their report, saying “Dissident nominee Peltz, as a significant shareholder, could be additive to the succession process, providing assurance to other investors that the board is properly engaged this time around.” They added that he has “considerable experience on other boards and fiduciary duties owed to a large shareholding group, appears best positioned to bring a shareholder perspective to the board.”
- The statement added that some investors “have likely drawn comfort from Iger’s return,” but “given the major missteps and severe consequences of the failed 2020 succession, particularly for a company that already had a history of succession drama, it may be difficult for others to simply trust that the board, albeit refreshed, will get it right this time. These shareholders may be concerned about post-Iger [Disney]. Our analysis favors this latter view.”
- Interestingly, the recommendation only backs Peltz himself and not his fellow board nominee, Jay Rasulo, saying, “Though we do not have any concerns about his ability to serve as an objective director, we recognize that Rasulo’s potential presence might create added friction on the board.”
- The firm also advised against voting for three nominees put forth by Blackwells Capital and also recommended that shareholders vote for current Disney director Michael Froman but abstain from reelecting Maria Elena Lagomasino, CEO and managing partner of WE Family Offices and a former senior executive at JP Morgan Private Bank and Chase Manhattan Bank and a current director of the Coca-Cola Co.
- The Walt Disney Company responded to this recommendation shortly after it was released. Mark Parker, chairman of the Disney Board of Directors, said: “While we’re heartened to see support for Michael Froman and ISS’ recommendation to withhold on dissident directors Jay Rasulo and the Blackwells’ nominees, we strongly believe that ISS reached the wrong conclusion in its recent report when it comes to adding Nelson Peltz to the board. In contrast to Glass Lewis, ISS fails to acknowledge the breadth of perspective and expertise Ms. Lagomasino adds to the Board. The strong recent performance and results overseen by the Disney Board demonstrate our focus on long-term shareholder value creation and succession planning and our commitment to good governance practices.”
- You can read the rest of the response from the Walt Disney Company below.
Disney’s Response:
- “The Walt Disney Company disagrees with ISS’s recommendation to support Trian nominee Nelson Peltz and believes Disney’s 12 Board nominees are best qualified to provide diligent oversight of management and create sustainable shareholder value. Nelson Peltz does not bring additive skills to the board, nor does he have a meaningful plan to deliver superior shareholder value in an evolving and increasingly complex global landscape, in stark contrast to the director Trian seeks to replace – Maria Elena Lagomasino. Furthermore, ISS suggests that the Board “comprises well-qualified and accomplished directors” and “does not lack a key skill set.”
Additionally, it’s worth noting that Trian’s silent partner, former Disney employee Ike Perlmutter, owns almost 79% of Trian’s Disney shares. In its report, ISS agrees that Perlmutter’s involvement is “an unfortunate distraction” and that he “may cast a baleful shadow over the Board” if Peltz is elected. This dynamic is relevant to assessing the Trian Group’s nominees, as Mr. Perlmutter has a fraught history and longstanding personal agenda against Disney’s CEO, Robert A. Iger, which would likely inhibit Nelson Peltz from working constructively with Disney’s Board, threatening the company’s continued turnaround.
Ms. Lagomasino is a seasoned financial leader with an extensive capital markets career that has been centered on fiduciary responsibility, honing an investor perspective, and deep expertise in corporate governance. She is a governance expert who brings a strong shareholder perspective to the Board as a founder of the Institute for the Fiduciary Standard, a think tank committed to promoting the vital importance of the fiduciary standard in investment and financial advice. She has, among other roles, served as the President and CEO of JPMorgan Private Bank, a Trustee of Carnegie Corporation of New York and the Chair of its Investment Committee overseeing $4b, and the CEO of WE Family Offices managing $14b for clients. She also serves as the Lead Independent Director of The Coca-Cola Company.
The Board strongly believes that replacing any of Disney’s nominees with any of the Trian Group or Blackwells nominees would deprive the company of skills and expertise required to help drive value for shareholders, a belief Glass Lewis’ report on March 18 also supports. Disney recommends that shareholders vote FOR only its 12 nominees and withhold votes for the Trian Group and Blackwells nominees using the WHITE proxy card.”