A Billionaire With a “Vendetta” Could Cost Shareholders $50 MILLION

At the beginning of 2023, billionaire Nelson Peltz — the founder of Trian Fund Management — decided that he had enough of the direction Disney was heading in. Trian Fund Management had stock in Disney, but they had always been relatively silent. Well, Peltz didn’t want to be silent anymore and launched a proxy fight to try to get a seat on Disney’s board of directors. A seat on the board became available when Susan Arnold — Disney’s first female chairperson of the board — stepped down.

Disney CEO Bob Iger did not seem to take Peltz’s board seat demand very seriously, at least not publicly. The fight did not last long, as Peltz dropped the threat of a shareholder vote when Iger announced that he was focused on cutting $5.5 billion from Disney’s budget and would be laying off thousands of employees.

Unfortunately, Peltz’s satisfaction with Iger and how he is running Disney has apparently reached its end. Peltz and the Trian Group are one again fighting for a position of power on the Disney board. Only this time, they do not want just one seat. Peltz has said that, this time around, he is planning on gaining AT LEAST three seats on the Board of Directors.

In a statement, Peltz said that he had given Disney months to “right the ship”, but the company had failed.

“Since we gave Disney the opportunity to prove it could ‘right the ship’ last February, up to our re-engagement weeks ago, shareholders lost ~$70 billion of value. Investor confidence is low, key strategic questions loom, and even Disney’s CEO is acknowledging that the Company’s challenges are greater than previously believed. While James Gorman and Sir Jeremy Darroch represent an improvement from the status quo, the addition of these directors will not, in our view, restore investor confidence or address the root cause behind the significant value destruction and missteps that this Board has overseen. Trian intends to take our case for change directly to shareholders.”

Related: Bob Iger Promises to Step Down as CEO

A Trian spokesperson said that the company did speak with Iger the week after Thanksgiving. Trian was told that Disney’s Board of Directors would be willing to meet with the company, but they would not be open to offering Peltz a seat on the board. Disney then announced the appointment of two new board members — Morgan Stanley CEO James Gorman and former Sky CEO Sir Jeremy Darroch.

In response to Peltz’s takeover threat, Disney issued a statement, saying that the company expects to have its cash flow reach pre-pandemic levels by next year.

Peltz Holds a Grudge

One reason Disney is so hesitant to give Peltz a position on the board is that they don’t think that he has the company’s best interest at heart. Peltz is good friends with Ike Perlmutter, a former Marvel executive who was fired by Disney earlier this year.

Disney said:

“Mr. Peltz, in partnership with Isaac Perlmutter, a former Disney executive, intends to take its case to shareholders. Mr. Perlmutter owns 78% of the shares that Mr. Peltz claims beneficial ownership of, or more than 25 million of the 33 million shares. This dynamic is relevant to assessing Mr. Peltz and any other nominees he may put forth as directors, as Mr. Perlmutter was terminated from his employment by Disney earlier this year and has voiced his longstanding personal agenda against Disney’s CEO, Robert A. Iger, which may be different than that of all other shareholders.”

Perlmutter was a key player in Peltz’s previous attempt to claim a seat on the Board of Directors. Mr. Peltz’s Trian group owns more than 33 million shares of Disney — 25 million of which belong to Mr. Perlmutter.

Peltz Could Cost Shareholders Millions

Disney is not the only one hoping that Peltz will back off from his desire to control Disney and its Board of Directors. Blackwells Capital, which has owned shares in Disney since 2018, is telling Peltz to drop it, or he will cost other shareholders approximately $50 million. They said that they believe Peltz’s push for power is merely “ego-driven”.

Blackwells is concerned that Trian’s campaign prioritizes Mr. Peltz’s ego over what is best for all Disney shareholders, and that its latest effort may cost Disney shareholders upwards of $50 million and serve only as a value destructive fog for Disney’s leadership and Board.

Mindless, drum-beating activism is not the right strategy for shareholders. Disney’s Board is acting in the best interests of all shareholders and should be allowed the time to focus on driving value at one of America’s most iconic companies without this fatuous sideshow.

Related: Disney Stands Against Shareholders’ Demand for “Communist China Audit”

Blackwells also pointed to the fact that Peltz has filled the board of a large company with himself and his allies, and it didn’t work out well for the company.

Trian and Mr. Peltz’s involvement at The Wendy’s Company (“Wendy’s”) (NASDAQ: WEN) serves as a cautionary tale for Disney shareholders. In an act of nepotism, Mr. Peltz installed his son, Matthew H. Peltz, as the non-executive Vice Chairman and packed the board with business partners and friends, while presiding over a period of disappointing results for Wendy’s shareholders.

Blackwells called Disney’s portfolio one of the best in the business and said that Disney did not need Peltz on the Board of Directors in order to move in a positive direction.

Trian and Peltz intend to take their push directly to Disney shareholders. Disney will open up new board nominations beginning December 5, 2023, and it will run through January 4, 2024.

Do you think someone like Nelson Peltz should be on Disney’s Board of Directors? Let us know in the comments!