Disney, Iger, Chapek, Peltz, Trian… the names can all be very confusing. So lets make it simple and easily explain the Disney Proxy War of 2022-23.
In SEC filings released this morning, Disney laid out their case for why Disney shareholders should vote to nominate their choices for the Board of Directors at their upcoming 2023 Annual Shareholders meeting.
While weeding through all that fine print might sound boring, the filings lay the groundwork for Bob Iger’s fight to retain complete control of Disney and a fight against Trian Group, led by billionaire Nelson Peltz. The filings also reveal more than Disney would probably like about fractures within the company going back to June of 2022 when Nelson Peltz first approached CEO Bob Chapek about a seat on the Disney board.
In July, Peltz and Chapek met for lunch at the Disney Hotel New York, (for clarity, this is part of the Disneyland Paris Resort). Peltz informed Chapek about his desire to get a seat on the Disney board.
He did not stop there.
By the end of the week, Peltz was joined by Marvel Entertainment Chairman Ike Perlmutter in a blitz of campaigning to only Bob Chapek, but also CFO Christine McCarthy and Disney board members Safra Catz and Amy Chang. Amy Chang might have been chosen due to also being on the board of Procter and Gamble with Nelson Peltz.
What’s exceptionally interesting is that Disney admits in their filings that Perlmutter’s case to Safra Catz was that adding Peltz to the board would “counter recent headwinds and solidify Chapek as CEO, and preempt other shareholder nominations.”
What’s more, according to Disney, Perlmutter stated that “without Mr. Peltz here… Mr. Iger would be back at Disney.”
This was in July. Less than a month before, Bob Chapek had received a three year renewal as CEO from the Disney board. The renewal was ahead of schedule and unanimous. At the very least, this filing shows that there had already been some discussion about replacing Chapek with Bob Iger only six months into Chapek’s Iger-free tenure at Disney. This also seems to confirm that the board voting unanimously to renew Chapek was a symbolic move meant to symbolize a stable company more than there actual was one.
Over the next few months, Peltz and Perlmutter would continue to call board members and executives at Disney to campaign for Peltz to get a board seat.
However, in August Dan Loeb of Third Point started his own campaign to get a candidate of his own choosing on the board. By the end of September, the board met and appointed Carolyn Everson, a Third Point-sponsored candidate. As part of the agreement, Everson would be nominated again for 2023, an agreement that Disney has honored.
Read the Full SEC Filing Here
After this, the filing goes from being very specific to being much more general about the timeline and who met with who on what days. Vaguely stated “in October and November, members of the Board met numerous times” to discuss concerns about Bob Chapek’s leadership and whether he should continue as CEO. They also discussed appointing Disney board member Mark Parker as Susan Arnold’s successor as Executive Chair.
It is worth noting that making a false statement on an SEC filing is considered fraud. While we at That Park Place are definitely taking no stance on that issue, the author of this particular article notes that generalized statements provide more cover when various parties do not desire to be specific about who did what and when. They also provide less of an opportunity for details to be “misunderstood” by anyone wanting to take legal action against the company if it should be decided that they acted against shareholder interests.
On Tuesday, November 8, Disney had their fourth quarter earnings call. After the call, Nelson Peltz contacted Bob Chapek to let him know that Trian had acquired $500 million in Walt Disney Company shares, with the intent of purchasing up to $1 billion unless Peltz got his nomination.
Within a week, Ike Perlmutter made another flurry of calls to Catz, Chapek, McCarthy and also Disney’s General Counsel Horacio Gutierrez to advocate again for Peltz. Peltz summoned Chapek to meet with in Palm Beach. As Peltz’s holding grew, his requests became more difficult to ignore.
Chapek agreed and had separate meetings with Perlmutter and Peltz. According to Disney, Peltz also called McCarthy and declared that if he was not nominated for a seat on the board, he would resort to a proxy fight.
A proxy fight is a process in which shareholders can assign their voting power to a representative that aligns with their interests. Nelson Peltz and Trian have engaged in numerous successful proxy fights over the years. His fight with Procter & Gamble entered into the ten-figure range before P&G bent to his demands.
In an emergency meeting, the board voted to cut off all private contact between Perlmutter, Peltz, and any board member including Bob Chapek. All communication had to occur with Christine McCarthy and Horacio Gutierrez present. Three days later, Bob Chapek was fired.
At the time of Chapek’s firing, Peltz’s holdings in Disney had grown to $800 million, which was large enough to get media coverage. Later that same week, new and old CEO Bob Iger had a video meeting with Peltz (with McCarthy and Gutierrez in attendance of course) where Peltz re-iterated that if he was not nominated to the board, he would engage in a proxy fight.
According to Disney, the board asked Peltz if he would be willing to accept anything short of his own board seat. They offered to explore mutual independent options to nominate to the board, but Peltz insisted that only a nomination of himself would stop him from engaging in a proxy fight. Peltz stated that if he was not given a board seat, he intended to mount a proxy fight “that would challenge Mr. Iger’s legacy.”
On January 10, Nelson Peltz finally got the opportunity to present his case for a seat at the table to the Disney Board. The meeting was held at Disney Burbank offices, but only Trian members attended in person. Anyone else did so remotely. Even though Peltz stated that he did not desire to remove Iger from his position, after the call Bob Iger was asked to leave so that the board could deliberate.
In another unanimous vote, the board elected to reject Peltz’s proposal and re-nominate the current board for re-election at the upcoming shareholders meeting and replace Susan Arnold with Mark Parker as Executive Chairman. They also voted unanimously to eliminate their empty board seat instead of allowing Peltz to continue his campaign.
It is not known whether Susan Arnold would be inclined to recuse herself in a vote to extend her tenure as Executive Chairman.
The rest of Disney’s recounting of events makes it clear that they stand behind Bob Iger, their interim CEO. The wording reads very much as a Nelson Peltz versus Bob Iger fight even though Peltz has stated in SEC filings that he does not intend to replace Iger if he is given a board seat.
Several trade publications stated that Nelson Peltz was offered an observer position on the board with no voting power. This is an interpretation of Trian’s own similar filing, which describes Susan Arnold offering Nelson Peltz “an information sharing and observer/advisory arrangement” with the board.
While Disney’s filings describe many attempts to appease Nelson Peltz, the filings get very specific that “there was no reference or offer of a board observer seat and the word observer was never uttered by Ms. Arnold or Mr. Gutierrez.” Instead, according to Disney, Arnold offered Peltz non-public information in exchange for a standstill in his proxy fight.
It appears that this would be Susan Arnold’s last act before the board voted not to extend her time as Executive Chair of the Walt Disney Company. Trian has announced their intention to proceed with a proxy contest immediately.
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