UPDATED with Disney letter to shareholders. In a letter to shareholders Wednesday, the Walt Disney Co. said it is better off “with Bob Iger at the helm” and without board representatives from activist firms like Nelson Peltz‘s Trian Fund Management.
“Delivering ambitious growth plans requires leadership with a deep understanding of the company’s current strengths and assets,” the letter said. “Disney’s board has the range of talent, skill sets, experiences, and professional backgrounds that are particularly relevant to the company’s business and strategic objectives.”
The letter is the latest salvo in a proxy battle ahead of Disney’s annual shareholder meeting on April 3. Peltz earlier in the day derided the company’s recent moves as “spaghetti against the wall” and blasted Iger, who is a board member as well as CEO, in a CNBC interview.
“With Bob Iger at the helm, alongside the Board of Directors and senior leaders, the company is intensely focused on building for the future,” the Disney letter said. Illustrated with an array of color photographs and graphics with key financial stats, the letter went on to say that the company’s strategic plan is “already delivering results.”
PREVIOUSLY:
Activist Disney investor Nelson Peltz, whose Trian Fund Management is clashing with CEO Bob Iger, blasted the company’s spree of earnings-timed announcements last week as “spaghetti against the wall.” He also guaranteed victory in the proxy fight.
“With the stock waning and Disney facing another proxy contest, Disney appears to again be trying to distract shareholders with what we see as a fanciful tale, claiming it has ‘turned the corner and entered a new era,’” Trian wrote in a letter to shareholders Wednesday. “And with that, Disney announced a slew of new promises and ideas — most still in the process of being developed — hoping that shareholders would just believe all was well and improving.”
Perhaps not coincidentally, as the Trian letter was hitting the wire, Disney announced Fantastic Four casting and release date news, with the Marvel property immediately becoming a trending topic on social media. Earlier this week, it sent its own communiqué to shareholders, touting the earnings and other activities.
Trian is seeking to have Peltz and former Disney CFO Jay Rasulo elected to the company’s board of directors. Disney formally rebuffed their request to be put forward as officially sanctioned nominees, so the matter will be put to a vote at its April 3 shareholder meeting. Two other investment firms have also been rattling cages ahead of the meeting, but Trian, which has waged successful proxy battles against Procter & Gamble and other companies, has been the most vocal. Former Marvel chief Ike Perlmutter has endorsed the Trian effort and enabled it to leverage his shares in the fight.
The letter singled out one move in what it called the company’s “spaghetti-against-the-wall plan”: a $1.5 billion investment in Fortnite maker Epic Games. According to Trian, the initiative “lacks a product roadmap or expected return targets.” Similarly, it asserted that Disney’s formation of a sports streaming venture with Fox Corp. and Warner Bros. Discovery “likely confused consumers, surprised important content partners and competes with the company’s own services.”
In an interview with CNBC timed to the release of the letter, Peltz was asked if he would sell his shares and retreat if he ends up losing the proxy fight. “Oh, come on. We’re not going to lose, OK? Let’s get that straight,” he responded. “The people who own this stock, they want action. They don’t want promises, OK? That’s not what they want. We’re gonna win. We never plan and state what we’re going to do if we lose because we don’t lose.”
In addition to Epic and the sports joint venture, the company announced that Taylor Swift’s Eras Tour concert film will stream exclusively on Disney+ next month; a launch date for ESPN’s stand-alone streaming service; and an animated sequel to Moana. All of that news, plus a solid set of financials, boosted Disney stock more than 10% the following day. It has risen 22% since the start of the year, though it remains more than 40% below its 2021 peak.
“This company sells at a multiple of their pronouncements,” Peltz told CNBC. “All of a sudden, they’ve awakened and they want to make all these announcements. By the way there’s very little meat on the bones of their announcements,” he added, extending the culinary metaphor.
“Frenetic activity, in the face of a proxy contest, is not a substitute for a well-considered corporate strategy. Nor is throwing spaghetti at the wall going to feed shareholders who have been starved of returns for so long,” Trian’s letter said, adding a cartoon depicting current board members actually throwing spaghetti against the wall. “Disney shareholders need the company to consistently perform under the watchful eye of a vigilant board. That is the recipe for good eating.”
Trian Fund Management, which is engaged in a proxy fight with Disney, depicted what it called the media company’s “spaghetti-against-the-wall” approach in a cartoon accompanying a recent letter to shareholders.
Courtesy