Nelson Peltz’s attempt to gain a seat on the Walt Disney Company Board has now moved to target the Disney Board’s failures and declining stock prices. Peltz has also targeted Disney board member Michael Froman and is after his seat at Mickey’s table.
Why Michael Froman?
Basically Trian doesn’t feel he has the experience stating ““Trian Group believes Mr. Froman has no experience as a public company director outside of Disney.”
Today Trian began sending proxy messages to Disney shareholders asking them to not vote for Froman and instead vote for Peltz to take the seat. It seems their focus has moved off of Bob Iger and onto Froman specifically.
In the document it claims that Disney lost $120 billion of it’s market value in 2022, while it’s earnings per share have dropped 50% since 2018. He also takes aim at the lack of dividends since 2020.
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. Asking shareholders to vote “FOR” Peltz and “WITHHOLD” for Froman.
In the filing Peltz laid out what he believes are shareholder grievances:
- With Disney’s stock plunging 44% in 2022, shareholders have collectively lost over $120 billion of market value
- Earnings per share have declined an astounding 50% since 2018 because costs have ballooned even as Disney has generated 41% more in revenue
- Disney’s strategy has caused debt to skyrocket and cash flow to plummet, leading to the continued elimination of the dividend paid for 57 straight years”
He argues that the “strategy” of the Disney company has skyrocketed debt while the cash flow plummeted, which caused the dividend elimination. Given all the assets the Walt Disney Company has like “consumer loyalty,” “valuable” IP, “renouned brands,” “an enviable library of content” and a “talented and engaged workforce” it is unacceptable that shareholders have ‘suffered,” claiming the board has destroyed company value by:
- Failing to instill a culture of accountability by allowing senior executives to earn “over- the-top” compensation even when the business performed poorly
- Failing to properly plan for leadership succession by leaving the Company unprepared to pivot to the next generation of executives when the need for change was evident
- Failing to align incentives with shareholders by personally owning very little Disney stock – they do not suffer along with us when their decisions destroy value-and are extremely busy elsewhere, with demanding full-time jobs of their own
- Failing to heed constructive shareholder input and showing concern for the interests of shareholders, time and again.
The letter goes on to explain that his company, Trian, wants to “restore the magic at Disney” by demanding more accountability and an ownership mentality in the boardroom.”
This has forced the Walt Disney Company to respond.
They are arguing that their board has been “focused on delivering long-term sustainable value and continually works to ensure it is comprised of the right mix of experience, skills and perspectives to guide Disney, particularly as it navigates this dynamic period.”
Disney continues by saying that the board does not endorse Nelson Peltz or his son Matthew (who is running as an alternate) as a nominee and they claim it “would threaten the strategic management of Disney during a period of important change in the media landscape.”
It is then argued that Michael Froman’s background in business and international affairs are necessary to drive shareholder value and is helpful to Disney to “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.”
Then Disney urges shareholders to take no action or to disregard the materials or blue proxy card they receive from Peltz and to wait for their white proxy card instead.
We will have to wait and see how this plays out.
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