Activist investor Nelson Peltz has re-engaged with Disney executives in a push for board seats and a change in leadership while its stock continues to tumble.
Peltz is a founding partner of Trian Fund Management, an alternative investment management fund based in New York that manages around $9 billion. He has used Trian to fight Disney management in the past and only paused the battle earlier this year in February.
Trian’s stake in Disney has risen significantly over the past 2 months up to about $2.5 billion, according to people familiar with the matter. This makes Trian (and thus Peltz) one of the largest shareholders of the company.
Despite this, Trian and Peltz don’t have any board seats under their direct control. The billionaire wants this to change.
The buying spree seems to have been an attempt to push for board seats for the firm and for Peltz himself.
The move comes at a difficult time for Disney as its stock has suffered horribly over the past 2 and a half years. The stock reached its all-time high in early March 2021, when it broke through $201. It has fallen nearly continuously since and now hovers at around $85.
Peltz and Trian argued that the entertainment giant was ignoring cost inefficiencies and that management made poor choices, such as its purchase of 21st Century Fox.
Trian put down its fight against Disney executives in February after it thought that the company’s outlook was turning around. The legendary former CEO of Disney, Bob Iger, was placed back in charge and the stock looked like it could recover well.
The fight seemed to end right after Disney announced a plan to cut 7,000 jobs and reinstate its dividend, 2 months after Iger was rehired. 8 months later it has only continued to fall which is likely why Peltz picked the battle back up.
Will Peltz Win This War?
Peltz seems to have a decent chance of winning his battle for board seats. He only owned about 6.4 million Disney shares in August, a fraction of a percent of the shares outstanding. Now, he owns over 30 million shares, which puts him at about 1.65% ownership of the $155 billion business.
This stake makes winning this fight much easier for Trian. Furthermore, this isn’t the first successful attempt at grabbing board seats at massive corporations. Peltz was able to force himself onto the boards of Unilever, Kraft Heinz, Wendy’s, Proctor & Gamble, and the Madison Square Garden company.
The firm still has a difficult task ahead of it as its stake is likely not yet large enough to successfully demand even a single board seat. Peltz’s investment in Disney is massive at over $2.5 billion but that’s still less than 2% of the company’s outstanding shares.
What Would Peltz Change?
You might wonder what the billionaire investor wants changed at Disney. Reportedly, he still believes that the stock is heavily undervalued but that it needs new, more focused leadership to turn the sinking ship around.
Perhaps his biggest worry is the succession of the top role of CEO. Disney’s famously successful chief executive, Bob Iger, retired in 2020 after 15 years on the job. Bob Chapek was brought on as his replacement but was fired soon after and Iger took the job back.
Iger has only promised to stay on as CEO until 2026 and Peltz is worried that the current leadership isn’t ready for his second retirement. The CEO role isn’t the only thing Peltz is worried about either.
Someone close to him said that he thinks that Disney needs to rethink its overheads, likely pointing to its struggling streaming service Disney+ as well as its recent movies like Little Mermaid which performed poorly at the box office.
The Hollywood writers strike only made these problems worse and until Disney starts to turn around its flailing departments, Trian is likely to continue to fight to shake up the company’s leadership.