Nelson Peltz: Disney proxy fight called off

Nelson Peltz decided to give up his fight against Walt Disney just days after Walt Disney unveiled a restructuring plan that would result in the loss of 7,000 jobs. This was the end of one of the most important corporate conflicts of recent years.

Bob Iger’s activist investor push is over. This removes any distraction from his mission to lead the loss-making streaming services company towards profitability.

Disney shares have risen 18% since Peltz’s announcement of his intention to join them on the board, less than a month after he announced his intention. This increase is likely to result in a significant profit on his $900mn stake.

On Thursday morning, Peltz stated that the proxy fight was over. He said that Trian Partners’ requests for changes had been met by the restructuring program, and that Disney intends to restore the dividend it suspended during the pandemic. “Now Disney plans for them to do everything that we asked.”

Disney had been scheduled to face off against Peltz at the company’s annual shareholder meetings on April 3. The company had declined to nominate him in January as a director and instead appointed Mark Parker, a Nike veteran, as its next chair to avoid the impending fight.

In November, Iger returned to Disney for a two year stint. His goal was to revive the company’s creative engines and shift its streaming business into profitability by 2024 following the disastrous tenure of Bob Chapek.

Analysts stated that Iger, the most prominent US chief executive, would have been a difficult task for Peltz. Peltz is a veteran activist well-known for his bruising campaigns against corporations such as Procter & Gamble.

Peltz stated that “We wish Bob, the management team, and the board the best,” Thursday morning to CNBC. “We will be paying attention. “We will be rooting.”

Disney attracts many retail investors who feel a strong emotional connection to the company. Iger is believed to have strong institutional support.

After Parker’s appointment, the two sides fought, with Trian publishing a 35-page report shortly after that criticized Disney’s dealmaking and in particular its 2018 acquisition of 21st Century Fox.

It also attacked the streaming business of the media group and called its succession planning process “broken”.

Disney countered that Peltz did not have media experience and was therefore unfit for the company’s board. Trian’s decision that Peltz’s son Matthew could run for the seat on the board was also criticised by Disney.

Disney shares rose as high as 9% in after-hours trading after Iger’s restructuring announcement, but were 2.5% higher on Thursday morning after Peltz quit his fight.

He also took one of Peltz’s main ideas and reinstated the dividend. Iger stated that he would request the board to reconsider the dividend’s reinstatement at a low level for the remainder of the year and gradually increase it as the business improves. Iger stated that cost-cutting efforts will make it possible.

These arguments seem to have convinced Trian to withdraw from the proxy fight — an unusual move for the fund.

Disney stated that they value all shareholders’ input and appreciate Nelson Peltz’s decision to announce Trian Fund this morning.