Walt Disney appears to have gained an advantage over activist investors in the ongoing battle for board seats and the future direction of the global entertainment conglomerate, with over half of all shares voted prior to the company’s annual meeting on Wednesday.
T. Rowe Price, holding approximately 11.7 million shares in Disney, or about a 0.64% stake, has backed the company by voting to re-elect Maria Elena Lagomasino and Michael Froman, the two Disney directors challenged by Nelson Peltz’s Trian Fund Management.
In another win for the company, it seems to have secured support from another significant investor, BlackRock, Disney’s second-largest shareholder. However, BlackRock declined to comment on the matter.
While the backing of major institutional investors may provide an early advantage to Disney in the proxy battle, those involved caution that results could still change as more votes are expected to come in on Tuesday, and shareholders who have already voted could still change their decision.
Top executives at Disney, along with activist investors Trian and Blackwells Capital, have been actively engaging with shareholders in last-minute efforts to persuade them to vote for their respective board candidates.
Disney is advocating for the election of all 12 of its current directors, while hedge funds Trian and Blackwells are advocating for their own board seats.
This battle comes at a crucial time for Disney, as it strives to revitalize its creative franchises, ensure profitability in its streaming business, and navigate the digital future of ESPN. CEO Bob Iger has described the activist campaigns as a “distraction.”
Despite Disney’s stock price increasing by 34% in 2024, it remains nearly 40% below its record high close in March 2021.
Nelson Peltz’s Trian Fund aims to secure two seats on Disney’s board, one for himself and one for former Disney CFO Jay Rasulo. Trian reiterated in materials sent to investors that current directors Lagomasino and Froman lack relevant skills.
Blackwells Capital, pushing for three board seats, is urging investors to vote for anyone but Peltz and is advocating for Disney to develop an artificial intelligence plan and consider spinning off its theme park and hotel assets into a real estate investment trust.
Iger, who was brought out of retirement in 2022 for his second stint as CEO, has been reaching out to shareholders to emphasize that transformation is underway and that activist investors in the boardroom are unnecessary distractions.
The outcome of the annual meeting remains uncertain, with both sides actively trying to sway shareholders, particularly large institutional investors like Vanguard, BlackRock, and State Street, whose votes could be decisive. While Disney has received notable endorsements, including from industry figures like George Lucas and Jamie Dimon, victory for either side is yet to be claimed.
