Why is Disney facing a possible proxy fight?

The return of Bob Iger to the role of CEO at Disney was one that both fans and investors initially cheered. Since that time, though, the stock has been, at best, flat—and activist investor and Trian Fund Management founder Nelson Peltz is not happy about that.



Peltz has been a thorn in Iger’s side for some time, first threatening a proxy fight in January of 2023. He called off that battle the following month, but by October he was threatening one again. Now, it appears, the war is about to begin after Disney declined to endorse Peltz’s attempts to join its board of directors.



Peltz has launched a website, RestoreTheMagic.com, and plans to use posts on X (formerly Twitter), to make his case to shareholders. (In addition to himself, Peltz is also pushing for former Disney chief financial officer Jay Rasulo to join the board.)



Proxy fights can be a bit confusing if you don’t follow a company closely. Here’s what you need to know about this one.



What is a proxy fight?



Proxy fights occur when one group (usually shareholders) attempts to pressure a company’s management or board of directors to change. That change can be anything from corporate policy to leadership to financial control of a company. They’re usually started when shareholder(s) feel their issues or complaints aren’t being addressed, which leads them to attempt to influence a larger group of shareholders to vote for change at the annual meeting.



Why is Peltz launching a proxy fight against Disney?



Ultimately, as you might suspect, it’s about money. Peltz, in a proxy filing with the Securities and Exchange Commission (SEC), said he isn’t happy with Disney’s stock performance of late, and he wants a clear succession plan in place for Iger, who has said he plans to retire in 2026. He’s also looking to cut costs, adjust executive compensation levels (tying them to the company’s performance), and bring back the stock dividend—and is pushing Disney to be more transparent about its businesses.



A little over a year ago, Peltz made another attempt to get on the board of directors, but relented after Disney unveiled plans to cut $5.5 billion in costs, which led to 7,000 layoffs and changes to the streaming service. (Iger has since raised the cost cutting target to $7.5 billion.)



Peltz, though, isn’t happy with the state of things.



“The company is underperforming,” he said on CNBC Thursday. “I made a run at them last year. They promised they were going to improve things. I took them at their word. Things got worse, the stock went down, results got worse. Okay, so no more. I can’t continue to give them more opportunities.”



Who is Jay Rasulo?



Rasulo, whom Peltz is also trying to install on the Disney board, was once considered a possible heir to Iger, before Bob Chapek was selected. He spent three decades at Disney in a number of roles, including president of parks and resorts, chairman of parks and resorts worldwide, and CFO.



“The Disney I know and love has lost its way,” Rasulo said in a statement last December.



How has Disney responded to Nelson Peltz?



Disney has been political in many of its past statements about Peltz, but when it came to denying him a board seat, it didn’t mince words. “In deciding not to recommend Mr. Peltz, the directors considered a number of factors, including that in a two-year quest for a seat on the Disney Board, Mr. Peltz had not actually presented a single strategic idea for Disney; that his assessment of Disney seemed oblivious to the ongoing secular change in the media industry; that Mr. Peltz’s experience was primarily in commodity consumer packaged goods businesses and not the media or technology sector, that Mr. Peltz had no experience in a business that is primarily driven by creative talent and focused on delivering uniquely memorable customer experiences; . . . [and that] created significant concern regarding how that partnership would impact Mr. Peltz’s agenda as a director,” Disney’s proxy read.



Aside from the aforementioned cost-cutting, Disney has also hired former Pepsi chief financial officer Hugh Johnston as CFO. (Johnston helped Pepsi avoid a proxy fight with Peltz in 2013.)



Can Peltz win his proxy fight with Disney?



You never want to count Peltz out of a fight, but he’s facing an uphill battle. Most proxy fights are unsuccessful. And Iger has only been on the job (again) for a little over a year, which shareholders may feel is an insufficient amount of time in which to turn things around.



Peltz, though, has until the spring to try to change shareholder minds—and will certainly point to films that have underperformed (like Wish) and the stock price. The date of the 2024 shareholders meeting has not yet been announced.