Disney Pushes Back Against Activist Investor’s Quest for Board Seat

The activist investor Nelson Peltz is pushing for a Disney board seat, the company confirmed on Wednesday, saying that it recommended shareholders to vote against his effort. Mr. Peltz, who is known for putting a magnifying glass on costs, wants Disney to revamp its streaming business, refocus on profit growth, reinstate its dividend and clean up the company’s messy succession planning.

In a statement, Disney’s board said that it “remains open to constructive engagement and ideas that help drive shareholder value,” noting that senior company executives and board members had “engaged with Mr. Peltz numerous times over the last few months.”

Trian Partners, the investment firm led by Mr. Peltz, has taken a roughly $900 million stake in Disney, according to two people familiar with the matter, who spoke on condition of anonymity because of the sensitive nature of the board discussions. Trian executives met with Robert A. Iger, Disney’s chief executive, and Christine M. McCarthy, Disney’s chief financial officer, in Los Angeles on Tuesday in an attempt to avoid a proxy battle, the people said. No agreement was reached after the 45-minute meeting.

On Wednesday, Disney offered Mr. Peltz a role as a “board observer” and asked him to sign an agreement that would limit Trian’s ability to buy more shares. Mr. Peltz declined. Later on Wednesday, Trian went public with its campaign with a website called Restore the Magic.

Mr. Peltz, 80, has repeatedly criticized Mr. Iger for orchestrating Disney’s $71.3 billion acquisition of 21st Century Fox assets in 2019. That acquisition, along with the pandemic, loaded Disney with some $45 billion in debt. Mr. Peltz has said that Disney drastically overpaid. The deal, though, brought two highly regarded executives — Dana Walden, who is now Disney’s entertainment television chief, and John Landgraf, who runs FX Networks — into the Disney fold. It also gave Disney ownership of “The Simpsons.”

Mr. Peltz does not want to remove Mr. Iger as chief executive, according to one of the people briefed on the matter. Instead, he wants Disney to change its succession plan so that Mr. Iger’s current term will be his last.

Mr. Iger served as Disney’s chief executive from 2005 to 2020, a period of spectacular growth. But he postponed his retirement four times, sidelining would-be successors, several of whom ended up leaving the company. In early 2020, Mr. Iger abruptly stepped down and named Bob Chapek, then Disney’s theme park chairman, as his successor.

Mr. Chapek was dealt an unenviable hand: He had to deal with the pandemic, which left most of Disney’s businesses badly damaged. Ultimately, however, Mr. Chapek stumbled more than he succeeded, enmeshing Disney in a political imbroglio in Florida, running up drastic losses in streaming and alienating important creative partners in Hollywood. Disney fired Mr. Chapek in November and brought Mr. Iger out of retirement to retake the reins. The board gave Mr. Iger a two-year contract.

Before he was ousted, Mr. Chapek announced that Disney would “look for every avenue of operations and labor to find savings.” That initiative, though delayed by the upheaval atop Disney, is continuing and expected to include layoffs. Mr. Iger has also announced a restructuring that will change how Disney’s streaming services operate. Disney’s direct-to-consumer unit racked up $1.5 billion in losses in the most-recent quarter, up from $630 million in the same period a year ago.

This is the second time in six months that Disney has faced pressure from an activist investor. Over the summer, Third Point, an activist investment firm started by Dan Loeb, demanded that Disney considered spinning off ESPN, among other moves. In the end, Disney agreed to add Carolyn Everson, a former Facebook and MTV Networks executive, to its board, and Mr. Loeb stood down.

Also on Wednesday, Disney said that Mark G. Parker, the executive chairman of Nike, would become Disney’s chairman after the company’s annual meeting of shareholders — if he is re-elected at the meeting. All members of the Disney board must be re-elected by shareholders every year. Mr. Parker has served on the board for seven years.

A date for the meeting has not yet been announced; it usually takes place in March.

Mr. Parker would succeed Susan E. Arnold, who has been chairman of Disney’s board since 2021. Ms. Arnold, a former executive at the Carlyle Group and Procter & Gamble, has served on the Disney board since 2007 and must step down because of a term limit.

Somewhat contentiously, Ms. Arnold oversaw a renewal of Mr. Chapek’s contract in June, at the time giving him nearly three more years as chief executive.

Mr. Parker will also lead a newly created committee for succession planning, which will review internal and external C.E.O. candidates.

As an activist, Mr. Peltz is largely known for his focus on operations, rather than pushing for mergers or sales as many other activists do. Mr. Peltz was previously a member of other company boards including Procter & Gamble and Unilever. Still, a company like Disney can present its own set of challenges: Running a successful Hollywood enterprise is very difficult to do on a budget.

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