Disney’s activist investor has found his target.
Nelson Peltz, the Trian Management founder who is leading a proxy fight against the entertainment company, is targeting Disney board member Michael B.G. Froman in the battle.
On Thursday, Peltz’s firm released a proxy form and began messaging Disney shareholders, urging them to withhold votes for Froman, and to vote for Peltz instead.
Trian also released a new open letter to Disney shareholders, tweaking its messaging in a subtle but critical way: In its initial presentation, Trian focused on the performance of Disney CEO Bob Iger and his predecessor Bob Chapek. In the new letter, Trian is targeting Disney’s board, calling out Disney’s declining stock price and EPS in 2022, as well as its decision to cancel its dividend, adding that “it is clear the Board of Directors has caused this recent destruction of value.
“As the owners of this great company, we must act,” the letter continues. “The current Disney directors wake up with challenging day jobs: building cars, selling clothing, processing credit card transactions, sequencing genes. All important things. But these accomplished directors are busy and we believe they cannot possibly focus sufficiently on Disney to ensure that 2023 and 2024 are nothing like 2022. If they could, 2022 would not have been like 2022.”
Of course, Trian’s letter does not note that the declines Disney saw in its share price were mirrored across most of the entertainment industry last year, and that the decision to cancel the dividend came amid the pandemic, when several of the company’s key business lines ground to a halt.
Disney’s board responded to Trian in a letter of its own to shareholders Thursday afternoon, defending its own actions and Froman’s experience.
Writing about Trian and Peltz, the board writes that it “has provided strong oversight focused on delivering sustained shareholder value.
“The Board is overseeing important strategic changes that our CEO Bob Iger is executing, such as putting more decision-making into the creative teams, implementing a cost reduction plan, prioritizing streaming profitability and improving the guest experience in our parks,” the letter adds.
As for why Trian targeted Froman, it remains unclear, though he is one of Disney’s longer-serving directors, having joined in 2018. The only directors to serve longer are GM CEO Mary Barra, Nike chairman Mark Parker, and finance executive Maria Elena Lagomasino. That being said, Froman is also less of a household name than Barra or Parker, potentially making him a more appealing target (he is currently an executive at Mastercard, and was previously U.S. trade representative).
In its letter, Disney’s board writes that Froman’s “decades of experience in business and international affairs are critical to helping Disney assess the risks and opportunities in an increasingly complex global marketplace, given its strategic focus on global growth of its customer base and innovation in changing markets.”
Peltz publicly launched his proxy battle last month, with Disney board chair Susan Arnold set to step down and Parker tapped as her successor. While Peltz said he did not intend to oust Iger, much of his presentation focused on Iger’s management at the company.
Disney responded to Peltz’s initial letter by releasing its own presentation, in which it wrote that Peltz “does not understand Disney’s businesses, and lacks the skills and experience to assist the board in delivering shareholder value in a rapidly shifting media ecosystem.”
The Hollywood Reporter subsequently revealed that Marvel chairman Isaac Perlmutter had been secretly advising Peltz in his proxy fight.
A Disney filing earlier this week revealed that it was Perlmutter who set up the first meeting between then-CEO Chapek and Peltz at Disneyland Paris last summer.
Indeed, Disney’s board wrote Thursday that “we are skeptical of his [Peltz’s] motives and believe he would be disruptive at a crucial period for Disney.”
11:50 am PST, Feb. 2. Updated with Disney response.
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