Disney gets personal in board battle with Peltz

Walt Disney responded on Monday to billionaire Nelson Peltz and his Trian Fund’s campaign to win two board seats with an attack on the activist shareholder’s motivations and qualifications in an increasingly bare-knuckled proxy battle.

In a 66-page regulatory filing late Monday, Disney said Peltz and Trian’s other designated board candidate, former Disney CFO Jay Rasulo, “are not what Disney needs right now.”

Disney argues Peltz lacks an understanding of the challenges the company is facing, and that his suggestions for improvement “are nothing new.” Neither Peltz nor Rasulo have the skills to help Disney, the company argues.

The criticisms elicited a swift response from Trian.

“Disney’s investor presentation is long on aesthetics and excuses, full of barbs unbecoming of a company like Disney and devoid of even a claim that the incumbent board has generated strong returns for shareholders,” Trian said through a spokesperson.

Trian’s campaign, ahead of an annual meeting with board elections next month, describes Disney as an iconic company with irreplaceable entertainment properties that has underperformed in terms of operating margins, return on invested capital and its money-losing streaming video operation.

It argues the current board fails to provide effective oversight and made its own case in a 133-page-long presentation last week.

In a video released online Monday, Disney said Peltz has a long history of “attacking companies to the ultimate detriment” of shareholders. His quest to win a Disney board seat, it argues, “seems more about vanity than a belief in Disney.”

Disney’s updated proxy filing goes further, noting that Trian was terminated as an investment manager within the company’s pension plan in 2021 after underperforming the S&P 500 by more than 500 basis points, on an annualized basis, over eight years. It says Peltz “offered excuses for the underperformance,” and, in July 2022, mounted the first of two campaigns to win a board seat.

Trian’s other board candidate, Jay Rasulo, was passed over for promotion nearly a decade ago, and “hasn’t been employed since leaving Disney,” the company notes in its video.

“Nelson Peltz and Jay Rasulo threaten to jeopardize the incredible progress the company has made since Bob (Iger) returned as CEO,” Disney argues via video. “At this critical moment, we simply cannot let that happen.”

In the video and regulatory filing, Disney underscores Peltz’s connection to former Marvel Entertainment Chairman Ike Perlmutter, whom it describes as a “disgruntled former employee” with a personal grudge against Iger.

The company’s updated proxy describes Rasulo as “Perlmutter’s guy” at Disney. When Iger informed Perlmutter in 2015 that Rasulo would not become the company’s next chief operating officer, Perlmutter responded, “You broke my heart.”

Peltz, the founder of Trian Fund Management, argued in his own presentation that Disney was slow to adapt to industry changes, including in streaming, made errors in its acquisition strategy and bungled succession planning.

The fund argues that Peltz and Rasulo will bring an “ownership mentality” to the boardroom. Reuters