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Disney Activist Investor Nelson Peltz’s Trian Wins Endorsement for Board Candidates From Advisory Firm Egan-Jones

Nelson Peltz has received the backing of a second investor-advisory firm in his battle to secure two seats on Disney’s board.

Egan-Jones Ratings Co., a credit ratings and proxy advisory firm, has recommended that Disney shareholders vote for both board candidates nominated by Peltz’s Trian — Peltz himself and former Disney CFO Jay Rasulo — in connection with Disney’s annual shareholders meeting being held virtually April 3. Egan-Jones also backed Trian’s proposal that Disney investors withhold votes for incumbent board members Maria Elena Lagomasino and Michael Froman.

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“We see very little downside and a lot of upsides in putting the Trian Nominees on the Board,” Egan-Jones said in its recommendation.” In detailing its reasons for supporting Peltz and Rasulo, Egan-Jones cited among other things the “apparent lack of a… long-term succession plan” to identify a replacement for CEO Bob Iger.

Peltz’s Trian controls about $3.5 billion worth of Disney shares, representing about 1.5% of the company’s outstanding shares. Peltz has said he’s waging the “Restore the Magic” proxy battle to install himself and Rasulo on Disney’s board in an effort to reverse the media conglomerate’s “chronic underperformance” in the stock market. About 79% of the shares controlled by Trian are owned by former Marvel Entertainment chief Ike Perlmutter (whom Disney accuses of holding a personal grudge against Iger).

Last week, influential advisory firm Institutional Shareholder Services (ISS) recommended shareholders elect Peltz to the Disney board (but not Rasulo). In its report, ISS cited Disney’s “failed” CEO succession planning and said Peltz “could be additive to the succession process, providing assurance to other investors that the board is properly engaged this time around.” Disney chairman Mark Parker responded that “we strongly believe that ISS reached the wrong conclusion.”

Meanwhile, another major proxy-advisory firm, Glass Lewis, sided with Disney and Iger in recommending shareholders vote for Disney’s 12 candidates and withhold votes for Trian’s nominees (and those of three from another investment firm that has entered the fray, Blackwells Capital). Disney “is undertaking what we consider to be a credible effort to shift key operational priorities under the leadership of one of the most well-respected CEOs in the industry,” Glass Lewis said, referring to Iger. “[W]e consider the subsequent 15 months [since Iger’s return as CEO] have provided management and an incrementally reconstituted board with adequate opportunity to launch a more credible succession program and develop, communicate and execute on several key initiatives which appear to reasonably target acknowledged operational and financial weaknesses at Disney.”

Egan-Jones, in backing Peltz and Rasulo for the Disney board, said the media company’s current board “appears cut off and unwilling to engage with investors and the broader market” and that it has displayed a “desire to protect the status quo for as long as possible and at all costs.” The firm also cited Disney’s “mediocre financial performance and the resultant lower valuation.”

Disney has disputed any suggestion that the board has neglected the CEO succession process.

According to the company, the board’s succession planning committee is “led by successful CEOs with recent, highly praised succession experience” and that the committee “is dutifully executing its mandate and is committed to a successful succession process.” Iger, who returned as Disney’s chief exec in November 2022 after the sudden ouster of Bob Chapek (Iger’s hand-picked successor), has a contract that runs through the end of 2026. The members of the board’s succession planning committee are Disney chairman Parker, executive chairman of Nike; James Gorman, executive chairman and former CEO of Morgan Stanley; GM CEO and chair Mary Barra; and Calvin McDonald, CEO of Lululemon Athletica.

Disney is urging investors to vote for its own 12-member lineup. The company has rejected the nominees from Trian and Blackwells as lacking “the appropriate range of talent, skill, perspective and/or expertise to effectively support the Board’s ongoing efforts to drive profitable growth and shareholder value creation in the face of continuing, industry-wide challenges.”

In the proxy fight, Disney and Iger have received the backing of George Lucas (Disney’s largest individual shareholder), former Disney CEO Michael Eisner, major shareholder Laurene Powell Jobs (the widow of Steve Jobs), and the grandchildren of Walt Disney and his brother Roy O. Disney.

In a statement earlier this week, Trian claimed it “supports Mr. Iger as a candidate for the board and as CEO,” and asserted that its goal was to shake up the Disney board with directors who have new ideas and perspectives. However, Trian withheld its votes for Iger’s reelection to the Disney board.

Separately, in a recent interview, Peltz questioned Disney’s “woke” Marvel films featuring Black and women superheroes — including “Black Panther,” which grossed a boffo $1.35 billion at the worldwide box office — asking rhetorically, “Why do I have to have a Marvel [movie] that’s all women? Not that I have anything against women, but why do I have to do that? Why can’t I have Marvels that are both? Why do I need an all-Black cast?”

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