Bob Iger vs. Nelson Peltz: Understand the fight for the future of Disney that takes place this Wednesday (3)

In recent months, one of the biggest concerns of Bob IgerCEO of Disney, didn’t come from box office or streaming subscribers, but rather from behind the scenes at the company, where a fight for board seats is being waged. Your rival in battle is Nelson Peltzinvestor supported by Ike Perlmutterthe infamous former CEO of Marvel (who almost fired Kevin Feige), and this Wednesday (3) is the day of the meeting that decides the winner.

When is the Disney shareholder meeting, and how to follow it?

At Disney’s shareholder meeting (which will be broadcast live here, in English only, at 2pm on the 3rd), in addition to reviewing the financial results and making announcements for the future, the company will elect the new board, with 12 members. Typically, the list of names proposed by the company itself, and headed by the CEO, is approved without much fanfare, but in 2024, the situation is different.

Peltz’s camp seemed dead until two weeks ago, when two firms that advise shareholders of big companies gave their seal of approval to his campaign, which is estimated to have spent more than US$25 million calling shareholders, buying advertising and so on. In its campaign against them, Disney spent US$40 million.

This Wednesday, we will have the result of all this. Disney shareholders, which unlike other companies include many individuals as well as investment firms, will vote and the 12 names with the most votes will receive seats on the board. One of those could be Nelson Peltz.

Peltz is an investor who works precisely in the positions of directors and company boards. He had stakes in Heinz, Wendy’s and General Electric, where he forced a CEO out to install an executive of his choosing in charge (this, too, was subsequently fired). He, however, has no experience in the entertainment business.

What does Nelson Peltz want to do with Disney?

With the support of Perlmutter, Peltz and Disney’s former finance chief, Jay Rasulo, want to take over two of the 12 vacancies on the council. Both were appointed by Trian Fund Management, a firm that has US$3.5 billion in Disney shares (approximately 32 million shares, out of the company’s 1.83 billion). Perlmutter is responsible for 79% of Disney shares within Trian.

Trian and Peltz’s argument is that Disney’s stock value is too low, that the company has lost its box office leadership position, and, most importantly, that Iger’s team has failed in the important job of finding a successor (Iger pointed Bob Chapek, who was fired, making room for Iger’s return). They also say that shareholders lost more than US$200 billion in share value, and demonstrate distrust in the ability of the board appointed by Iger to recover all of this.

Disney shares are actually 35% more valuable than they were a year ago. It’s true that, looking at the last three to five years, the value has fallen, but Iger and his team have gained strength, and are already putting into action much of what Peltz and Trian propose: focus on large franchises, cutting expenses, betting on sports broadcasts and even explore the sale of television channels.

Peltz has also been trying to build strength on the argument that Disney is too “woke.” He criticized, for example, the production of a film with a black cast, such as Black Panther. This is an attempt to win over right-wing shareholders.

Who has the most chances of winning?

Until a few weeks ago, Peltz and Rasulo, the Trian team, seemed to have lost steam. Then, some support emerged: Institutional Shareholders Services (ISS), who recommended Peltz (but not Rasulo), and the Edgar-Jones Ratings Co.who supported both Finally, the CalPERS, a California pension fund that has 6.65 million Disney shares, has already declared a vote in favor of Peltz and Rasulo. It is worth noting, however, that only CalPERS has voting power among these.

Iger’s camp, however, appears to have more support. George LucasDisney’s largest individual shareholder, declared support for Iger. Michael Eisnerformer CEO of the company, Laurene Powell Jobsthe company’s largest shareholder, and the family of Walt Disneyincluding his daughter Abigailare on the side of the current CEO.

Iger and Disney have greatly highlighted the positive results of recent quarters, the change in strategy that the company has applied with spending cuts and focus on big films, and Peltz’s lack of experience in the world of entertainment as his main arguments against Trian.

Votes can be declared before the meeting, and until then, Iger is ahead (according to the WSJ). We will only know for sure, however, when the shareholder meeting ends, and we have an answer.

What happens if Nelson Peltz wins?

First, it will be a big vote of no confidence from shareholders in Iger, who has a contract until 2026. It’s hard to imagine the CEO leaving the company before then, and even though Peltz and Trian gain more strength in the next two years, the direction strategies taken by Iger in recent months are not so different from what his rivals propose.

Peltz and Trian have even declared their support for Iger as CEO and board member, and do not say they do not want to force his departure. It’s a strategic statement. Most shareholders wouldn’t want another leadership change now, but that wouldn’t stop Peltz from slowly weakening Iger.

Iger, for example, will lose strength in choosing a successor. That’s why Peltz has been so vocal about Chapek’s failure. At companies this size, choosing a new CEO is one of the most important jobs of an outgoing leader, and Iger, in the eyes of many, failed at it.