Disney Says Investor Seeking Board Seat ‘Does Not Understand’ Company
Robert A. Iger is coming out swinging.
Mr. Iger, chief executive of the Walt Disney Company, counterattacked the activist investor Nelson Peltz on Tuesday in a securities filing and aggressively defended his track record with acquisitions, especially the 2019 purchase of 21st Century Fox assets for $71.3 billion. Mr. Peltz started a proxy battle last week to put himself on the Disney board, saying that it was a “company in crisis” and urgently needed shaking up.
“Nelson 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,” Disney said in the filing, noting that Mr. Peltz lacked a track record in media and technology. Disney added that, in conversations with its board, Mr. Peltz had “no strategy, no operating initiatives, no new ideas and no plan.”
Trian Partners, the investment firm led by Mr. Peltz, declined to comment. Trian has taken a roughly $900 million stake in Disney, and has said it may increase its position further.
Mr. Iger was rehired as Disney’s chief executive in November after the ouster of Bob Chapek, who had faltered on various fronts. In a separate securities filing on Tuesday, Disney disclosed that Mr. Chapek received a severance package valued at $20.4 million. His compensation for Disney’s 2022 fiscal year, which ended in September, totaled $24.2 million, a 26 percent decline from the previous year.
Proxy battles are old hat for Mr. Peltz. He has waged successful ones against Procter & Gamble and Heinz. He lost one against DuPont. Disney has not faced a sustained shareholder battle since 2004, when Roy E. Disney, a nephew of Walt Disney, led a successful drive to oust Michael D. Eisner as Disney’s chief executive.
Notably, Mr. Peltz has an ally on the inside of Disney: Ike Perlmutter, 80, the irascible chairman of Marvel Entertainment and a significant Disney shareholder in his own right. Mr. Peltz and Mr. Perlmutter are longtime friends. In a separate filing on Tuesday, Disney said that Mr. Perlmutter contacted Disney board members and senior executives six times between August and November to push for Mr. Peltz to join the board. “He said without Mr. Peltz there, former executives including Mr. Iger, would be back at Disney,” the filing said of Mr. Perlmutter.
Mr. Perlmutter’s job at Disney involves consumer products. He used to oversee Marvel’s movies, but Mr. Iger took away that part of his portfolio in 2015. At the time, Mr. Perlmutter and Kevin Feige, president of Marvel Studios, were locking horns, in part over Mr. Feige’s plan to add diversity to the Marvel Cinematic Universe with films like “Black Panther” and “Captain Marvel.” Mr. Perlmutter ceded oversight of Marvel television shows in 2019.
Mr. Peltz, who is known for intensely focusing on costs, has said he wants Disney to revamp its streaming business, refocus on profit growth, reinstate its dividend and clean up the company’s messy succession planning. In its filing, Disney pointed out that it was already doing most of these things. For instance, Mr. Iger, who served as Disney’s chief executive from 2005 to 2020, almost instantly began restructuring Disney’s streaming business when he returned last year. One change involves prioritizing profit over subscriber growth.
Before he left, Mr. Chapek announced that Disney would “look for every avenue of operations and labor to find savings.” That initiative, though delayed by the upheaval atop Disney, is continuing and expected to include layoffs. One person working on the cost-cutting program at Disney described it as “deep.”
Last week, Disney announced that Mark G. Parker, the executive chairman of Nike, would become Disney’s chairman after the company’s annual meeting of shareholders, replacing Susan Arnold. (Disney has not scheduled its annual meeting, which will be held virtually.) Disney said that Mr. Parker would also lead a newly created committee for succession planning, which will review internal and external C.E.O. candidates.
Mr. Peltz, 80, has repeatedly criticized Mr. Iger, 71, for orchestrating Disney’s acquisition of 21st Century Fox assets. That purchase, along with the pandemic, loaded Disney with some $45 billion in debt. Mr. Peltz has said that Disney drastically overpaid, a claim that has become central to his push for a board seat.
Disney on Tuesday said the 21st Century Fox assets have played a “critical” role in helping the company transition to streaming. Disney+ was an out-of-the-gate success, in part because it offered “The Simpsons,” which came as part of the Fox deal. The acquisition also brought highly regarded executives — including Dana Walden, who is now Disney’s entertainment television chief — into the Disney fold.
During his previous tenure as chief executive, Mr. Iger expanded Disney’s market capitalization to $231 billion from $49 billion and delivered shareholder returns that far outpaced growth in the S&P 500. Mr. Peltz has described Disney’s performance as lacking under Mr. Iger.
In one of its filings, Disney described repeated interactions with Mr. Peltz and other Trian executives, starting in July 2022. Ultimately, the Disney board on Jan. 10 voted against recommending to shareholders that Mr. Peltz receive a seat. The vote was unanimous; Mr. Iger was not present.
In coming to that decision, the board cited concern about “disruption to Mr. Iger and the management team at a crucial juncture.” The board also focused on “Mr. Peltz’s lack of media or technology industry experience coupled with his repeated focus in his presentation on successful approaches from businesses like Heinz, Procter & Gamble and DuPont, which have little in common with Disney.”
Lauren Hirsch contributed reporting.