Nelson Peltz and Trian Come Out Swinging at Disney… with Names!

As the board room battle for the soul of the Walt Disney Company heats up, it looks like Nelson Peltz from Trian Fund Management is focusing his strategy.

According to Reuters, Trian is specifically asking for proxy votes to replace current Disney board member Michael Froman with Nelson Peltz.

At WDC, Michael Froman is a member of the Governance and Nominating Committee and has no experience in entertainment media outside of his time as a board director at Disney. This is important because one of Iger and the Disney board’s primary accusations against Nelson Peltz and Trian is that Peltz does not have experience in entertainment media. If Peltz is running to replace a person Froman, this would appear to put them on equal footing.

What’s more, SEC filings reveal the full extent of proposals that Peltz and Trian are bringing forward for Disney shareholders to vote on.

Let’s run down them one by one:

Proposal 1: The election of Nelson Peltz (or another Trian Fund Management nominee) to the Walt Disney Board.

Simply stated, this is what Peltz has been gunning for over the last 8 months. Myself, WDWPro, and Valliant Renegade have covered this process in detail on That Park Place, YouTube, and Twitter. Basically, Peltz asked Bob Chapek very nicely for a board seat in the middle of 2022. Marvel’s Ike Perlmutter joined Peltz in a campaign to curry favor with existing board members. As Peltz accumulated shares in the Walt Disney Company (that are likely now valued over $1 billion), board actions became more drastic, apparently to avoid Peltz’s favored outcome. SEC filings reveal a highly correlated fact pattern between Peltz getting closer to a board seat and the firing of Bob Chapek, the sudden termination of Susan Arnold as Chairman of the board, the elimination of her board seat, and the naming of Mark Parker from Nike as her successor.

It is worth noting that Susan Arnold was reaching the end of a 15-year tenure on the WDC board, but a lack of a substantial statement from Susan Arnold and Disney refusing to take advantage of available loopholes to keep Susan Arnold in her position have caused some speculation. Susan Arnold is an openly gay female executive in a time when Disney literally puts “diversity checkboxes” on their SEC filings and she is being replaced by a white man with ties to Communist China.

Proposals 2 through 4: Accounting and Executive Compensation (aka “Housekeeping”)

If Peltz and Trian have a disagreement with Iger and Disney on these matters, they are not choosing to pursue a conflict at this time. Trian has stated that they will vote in-line with the WDC proxy statement on these proposals.

Proposal 5: Communist China

Peltz and Trian want a full breakdown of Disney’s operations in China and how vulnerable the company is to the Communist Party of China (aka the government of China).

“RESOLVED: Shareholders request that, beginning in 2023, The Walt Disney Company report annually to shareholders on the nature and extent to which corporate operations depend on, and are vulnerable to, Communist China, which is a serial human rights violator, a geopolitical threat, and an adversary to the United States. The report should exclude confidential business information but provide shareholders with a sense of the Company’s reliance on activities conducted within, and under control of, the Communist Chinese government.”

Even under the most forgiving of interpretations, if such a report would see the light of day it would not look good for Disney. Disney has two theme parks in territories controlled by the CCP. They would not be allowed to function unless they were owned more than 50% by the government of China. Shanghai Disneyland is the crown jewel of Bob Iger’s legacy and is the result of decades of building relationships with multiple regimes of a government accused of civil rights violations (that we will not be explicitly covering in this article).

In Disney’s other non-Chinese theme parks, the company has some financial recourse to appeal unfavorable decisions made by governing jurisdictions. In China there is no such system. Simply stated: Disney, not unlike the citizens of China, has no rights under Chinese law. Specifically they have no right to utilize their Chinese theme parks should the CCP decide that they no longer find the relationship to be in their favor, or if relations with the United States at large should sour.

According to WDWPro, Bob Chapek was allegedly working on plans to mitigate this risk should the CCP find themselves in a more antagonistic stance against the United States.

Proposal 6: Charitable Contributions Disclosure

Nelson Peltz and Trian would like for the Disney board to admit to whose palms they have been greasing. Gift-giving is a so customary in Asian cultures that many Ethics courses and Fortune 500 company value statements that prohibit bribery also contain a specific carve-out for the allowance of gift-giving for Chinese and Japanese trade partners. This is not necessarily an indication of malfeasance, but it is proposal that could shine more light how Disney has become so cozy with the government of China.

“RESOLVED: The Proponent requests that the Board of Directors consider listing on the Company website any recipient of $10,000 or more of diect [sic] contributions, excluding employee matching gifts.”

Proposal 7: Political Expenditure Reports.

Peltz and Trian want Disney to produce a full report of their political donations that go “against [their] publicly stated company values and policies.” And Peltz wants a full explanation as to why. On the lighter side, this could be referring to the Parental Rights in Education Bill in Florida (aka “Don’t Say Gay” aka “Wait Till Eight”) or it could be referring to the use of certain regions in China during the filming of Mulan that also hosted certain minorities that are found unfavorable to the CCP. If you are not understanding the meaning of this statement, we suggest that you might try CONCENTRATION at several outdoor locations like parks or CAMPS.

Domestically, Disney has always rode the fence by donating to all politicians . Their statements after the Florida situation seem to indicate they would become a much more politically active company. This report could simply be a reaction to that.

“RESOLVED: Shareholders request that Disney annually analyze and report, at reasonable expense, the congruence of its political and electioneering expenditures during the preceding year against its publicly stated company values and policies, listing and explaining instances of incongruent expenditures, and stating whether the identified incongruencies [sic] have or will lead to a change in future expenditures or contributions.”

Proposal 8: Reversion of Corporate Bylaws.

We are still researching the nature of this change, but Peltz and Trian seems to think Disney’s corporate bylaws before March of 2019 were more favorable to their view of the company.

Of course, statements from the Walt Disney Company have asked that shareholders vote against all of Trian Fund Management’s proposals. Right now, Bob Iger and the Walt Disney Company’s greatest defense in this proxy battle is turning around the stock price. This would not only make current shareholders more likely to be pleased with the trajectory of the company, but it would make it more difficult for Peltz and his allies to obtain a greater stake. Over the last thirty days, Disney has gone from under $90 a share to over $110 per share.

This situation is still developing, and we are eagerly awaiting analysis from WDWPro and Valliant Renegade. Valliant Renegade will be premiering a video on his channel covering this story in much greater detail. You won’t want to miss it.

It also may be worth noting that the one individual in particular seems to be in the hot seat when it comes to who Trian Partners just so happens to have significant attachments to international relationships.

Stay tuned here to That Park Place, to myself, Valliant Renegade, and WDWPro on Twitter, and follow Valliant Renegade and WDWPro on YouTube.

Of course, on Sunday evening at 5pm CT / 6pm ET, the Valliant Renegade channel will be covering this situation and your questions LIVE along with WDWPro. I highly recommend subscribing to the Valliant Renegade channel because we will also be covering the Walt Disney Company earnings call on Wednesday, February 8 LIVE. It’s going to be a hot one.