Disney says Peltz ‘lacks skills’ to help business as proxy battle heats up

Jan 17, 2023

By Dawn Chmielewski

LOS ANGELES (Reuters) – Walt Disney Co on Tuesday defended its decision to deny Nelson Peltz a board seat, saying the activist investor “lacked the skills and experience” to help the media and entertainment giant.

The house of Mickey Mouse in a letter to shareholders also underlined the company’s successes under Chief Executive Bob Iger, who recently returned from retirement to lead the company for a second time.

“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.

The billionaire last week formally launched his bid for a board seat to rescue the company from what he called a “crisis” of overspending on the streaming business, the purchase of 21st Century Fox and failed succession planning.

Peltz had an internal advocate, Marvel Entertainment Chairman Isaac “Ike” Perlmutter, who asked that the activist investor be added to Disney’s board on a half-dozen occasions, according to Disney’s preliminary proxy statement and accompanying materials filed with regulators. Perlmutter has been pressing the issue since July 2022, contacting former CEO Bob Chapek, director Safra Catz and other senior executives on behalf of Peltz.

Peltz’s move is seen as a serious challenge to Iger and pits one of the most popular executives in Hollywood against the activist investor known for his work at consumer firms.

The billionaire investor told CNBC last week that Disney should buy the remaining stake in Hulu it does not already own or exit the streaming business. Disney has an agreement to acquire Comcast Corp’s one-third interest in the Hulu streaming service as soon as January 2024.

Disney also needs to boost capital expenditure at its parks business, where it probably raised ticket prices “too hard,” he said then.


In its filing Tuesday, Disney said it was already working to improve profitability at the Disney+ streaming business that Iger helped launch in 2019 and was rolling out broader cost-cutting measures.

The company defended the acquisitions it made under the since-returned CEO Iger, including for Pixar, Marvel and Lucasfilm. It said they were transformative and enhanced the company’s value.

As early as July 11, 2022, Disney had been engaging in conversations with Peltz, according to the preliminary proxy filed on Tuesday with the U.S. Securities and Exchange Commission. The activist expressed his support for then-CEO Chapek, and presented himself as someone who could be helpful if he joined the board.

Perlmutter, a Disney employee and shareholder, added his voice to Peltz’s campaign to join the board, arguing at one point that the activist could help the embattled Chapek “solidify his position as CEO.” Without Peltz’s help, the Marvel chairman warned, “former executives including Mr. Iger, would be back at Disney.”

As Peltz and Perlmutter continued to press their case, another activist was pounding on Disney’s door – Daniel Loeb, chief executive officer of Third Point. In August, Loeb contacted Chapek and Chief Financial Officer Christine McCarthy to say he had invested in Disney and recommended changes. He agreed to a standstill with the Sept. 23 appointment of an independent director, Carolyn Everson.

Meanwhile, Peltz’s campaign for a board seat intensified. He

notified Chapek on Nov. 8 that he had acquired $500 million in Disney stock, and planned to increase his stake to $1 billion. Peltz said his Trian group intended to nominate a sale of directors at the 2023 annual meeting unless he was named to the board.

The activist continued to seek a directorship even after the board fired Chapek on Nov. 20 and brought back Iger. In a video call three days later, Peltz rejected Iger and McCarthy’s suggestion that they find a mutually acceptable independent director to serve on the board. Peltz said he would accept only the addition of himself to the board, according to Disney’s account.

Disney’s board elected not to offer Peltz a seat, citing concerns about “introducing further disruption to Disney’s management team nine days into Mr. Iger’s return.”

On Jan. 11, Peltz took matters into his own hands. His Trian Fund Management issued a news release announcing its nominee to the board, Peltz, setting in motion the proxy battle.

Trian Fund Management, which owns a 0.5% stake, or roughly $900 million in Disney, declined to comment on Tuesday.

Unless Peltz settles with Disney, investors will vote this year on whether he should sit on the company’s board. Last year, the annual shareholder meeting was held on March 9.

(Reporting by Dawn Chmielewski in Los Angeles and Eva Mathews and Aditya Soni in Bengaluru; Editing by Shinjini Ganguli and Matthew Lewis)



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