Robert Iger’s return to Disney has not impressed everyone. Now, with one major investor looking to shift the company’s strategies, Iger et al are using a less-than-friendly tactic to ward such off such changes.
“Nelson 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 investor with over $900 million of Disney stock and a penchant for beating the S&P500 in his prior endeavors is facing insults from The Walt Disney Company as he attempts to obtain a seat on the board.
A glance at Peltz’ track record via his Trian Hedge Fund may indicate why Disney — itself with a completely different ideological mindset from Petlz — is taking his attempts so seriously.
Nelson Peltz, CEO and Co-Founder of Trian Fund Management, is ranked #2 on the TipRanks Best Hedge Fund Managers list. Trian Fund Management was founded in 2005 and is a “highly engaged shareowner that combines concentrated public equity ownership with operational expertise,” according to the company’s website.
Besides for Peltz, Trian’s founding partners include Ed Garden and Peter May. Peltz currently has $8 billion worth of assets under management, that is, more assets than 99% of other hedge fund managers.
Peltz’s portfolio has gained 444.1% since June 2013 versus the S&P 500 index gaining 290.9% over the same period. The hedge fund manager’s portfolio has given an annualized return of 45.6% over a period of three years.
— Shrilekha Pethe, NASDAQ.com
When you’re rated #2 in the world, insults from Disney’s top brass about your lack of skills may just have the opposite effect. As we’ve seen with Peltz’ battle with Proctor and Gamble over the years, he’s unlikely to give up. And insulting his acumen may just harden his desire to force his way on the board one way or another. Doing so would almost certainly open his ability to view important documents and gain insights into The Walt Disney Company. That might include the real reasons for the company renewing and empowering former CEO Bob Chapek earlier than necessary last year, only to throw him out and take the golden parachute on their chin just months later. What exactly was going on?
One thing is for sure: the people running Disney are running scared with Peltz. They’ve gone to such lengths as to replace the Chair of the Board of the Directors and purposefully alter the company’ structure such that former Chair Susan Arnold’s position is not just vacated… it’s gone completely. That means there’s one less seat at the table, and may indicate the company is willing to take extreme measures to limit Peltz’ ability to get into the Board Room with real Board powers.
The latest moves from Disney included a slideshow that did little to prove the company has a strong logical basis for fighting Peltz. While simultaneously insulting the man’s prowess, the company also admitted it’s trying to implement many of the strategies he’s suggested.
Disney also acknowledged that some of the things Peltz is pushing for are already taking place, including implementing a cost-reduction plan and “streamlining our organizational structure to enhance productivity”; “prioritizing streaming profitability (in addition to revenue and subscriber growth)”; and “improving the guest experience” at its theme parks by providing “more value and flexibility.”
— Alex Weprin, THR
With a previous stated transition (again) on way for current CEO Robert Iger in less than two years, and with both the former CEO and former Chair of the Board having been removed after only one-year tenures, it seems Disney has seldom been in such a tumultuous period. The next earnings report may be even more interesting than the one before. Given what occurred just after the last, that’s really saying something.
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