Walt Disney Co. (NYSE:) fended off a challenge from activist investors as shareholders voted for all 12 of Disney's director nominees. However, the news was not received well by investors, at least initially, as the stock price fell about 3% on Wednesday.
At least for now, this ends a long-running proxy fight waged by Disney's majority shareholder Trian Partners, which owns $3.5 billion in Disney stock, to win a seat on the company's board of directors. Trian has put forward two names for election to Disney's board of directors: Trian founder Nelson Peltz and former Disney chief financial officer Jay Laszlo. In addition, hedge fund Blackwells Capital, another Disney shareholder, proposed three additional director nominations, but none were successful.
Disney issued a release Wednesday afternoon, saying, “At Disney's 2024 Annual Meeting of Stockholders today, all 12 of Disney's directors were elected by significant margins over the nominees of Mr. Tryon and Mr. Blackwells. '' he announced.
The final tally will not become official until it is verified by independent auditors in the coming days.
The election was a vote of confidence in Disney CEO Bob Iger, who had been challenged by Peltz and Tryon for the second year in a row. Iger, Mary T. Barra, Safra A. Catz, Amy L. Chan, D. Jeremy Darroch, Carolyn N. Everson, Michael BG Froman, James P. Gorman, Maria Elena Lagomasino, With Calvin R. McDonald and Mark G. Parker, Delica W. Rice was elected to the board.
“I would like to thank our stockholders for their trust and confidence in our board and management team. Now that the distracting proxy contest is over, we are committed to our most important priority: growth for our stockholders. We want to focus 100% of our attention on value creation and creative excellence for our consumers,” said Iger.
Trian began a proxy fight ahead of last year's meeting but called it quits after Mr. Iger announced a restructuring plan that would cut costs by $5.5 billion and lay off 7,000 employees. I decided. But the plan didn't move far enough, as Disney stock rose just 4% last year. Mr. Peltz thus began a new proxy fight for this year's meeting.
Beyond cost-cutting, Tryon also plans to discuss Disney's succession plan after Iger initially steps down in 2021, failures at its streaming business and TV networks, the “strategically flawed” 20th Century Fox acquisition, and ESPN's The company had problems such as a lack of strategic clarity. , concerns include a lack of board focus and accountability, earnings struggles, and the stock's underperformance relative to its peers. Over the past five years ending April 2, Disney stock returned an average of 1.4% annually.
Disney pushed back on some claims, saying it was making progress on several fronts, including cutting costs, improving cash flow, increasing streaming profitability and announcing a new sports streaming platform scheduled to launch this fall. Disney also reported a stronger-than-expected fourth quarter, forecasting a 20% increase in revenue in 2024 and a doubling of free cash flow to $8 billion by the end of the year. As a result, the stock price has increased 31% year-to-date.
Trian is proud of the shock
Axios reported some of the results on Wednesday, but note that these notes are from the outlet's sources and are not official. Most of the support came from individual investors, with 75% backing the Disney candidate, according to Axios. It was also announced that Mr. Iger received 94% of the vote and Mr. Peltz approximately 30%. According to Axios, Lagomasino reportedly defeated Laszlo by a roughly 5-1 margin.
“While we are disappointed with the outcome of this proxy contest, Trian is extremely grateful for all of the support and dialogue we have had with Disney stakeholders,” Trian management said in a statement after the vote.
“We are proud of the impact this company has had with a renewed focus on value creation and good governance. Since partnering again with Disney in late 2023, Disney has announced a number of new operational announced initiatives and capital improvement plans. The board of directors has been revamped and two new directors have been added. Over the past six months, Disney's stock price has risen approximately 50%, making it the company's best performer since the beginning of the year. .”
Trian added: “I wish all of our stakeholders, including Disney's board and management team, the best of luck.” We look forward to our performance and remain focused on our continued success. ”
Wednesday's drop in stock prices is likely an inevitable reaction to the headlines, but it doesn't significantly change Disney's trajectory. The challenge from Trian and Blackwells may have failed, but it succeeded in pushing the company even more strongly in the direction it appears to be heading. Disney's stock, trading at 26 times forward earnings, appears to be a good value, and Disney investors should benefit if the board and management can execute on their plan.
