Influential proxy advisory firm Institutional Shareholder Services (ISS) recommends The Walt Disney Company shareholders vote for Nelson Peltz to join the Disney Board of Directors.

ISS Supports Nelson Peltz for Disney Board

In a report released on Thursday, ISS states Disney has “failed” in creating a succession plan for the CEO position. Current-and-former Disney CEO Bob Iger originally chose Bob Chapek as his successor. But after barely over two years in the position, the Disney Board of Directors fired Chapek and Iger returned. Iger signed a two-year contract in late 2022. In July 2023, the Disney Board of Directors announced that Iger’s CEO contract was extended through 2026.

According to a recent report, four executives are in the running for the CEO position: Co-Chairman of Disney Entertainment, Dana Walden; Chairman of Disney Parks, Experiences, and Products, Josh D’Amaro; Co-Chairman of Disney Entertainment, Alan Bergman; and Chairman of ESPN and Sports Content, Jimmy Pitaro.

“Dissident nominee Peltz, as a significant shareholder, could be additive to the succession process, providing assurance to other investors that the board is properly engaged this time around,” ISS stated, adding that Peltz, with his “considerable experience on other boards and fiduciary duties owed to a large shareholding group, appears best positioned to bring a shareholder perspective to the board.”

ISS went on to say that some investors “have likely drawn comfort from Iger’s return, given the major missteps and severe consequences of the failed 2020 succession, particularly for a company that already had a history of succession drama, it may be difficult for others to simply trust that the board, albeit refreshed, will get it right this time. These shareholders may be concerned about post-Iger [Disney]. Our analysis favors this latter view.”

Peltz is CEO of Trian Partners and has also nominated former Disney CFO Jay Rasulo. Although ISS supports Peltz, they do not recommend shareholders vote for Rasulo.

“Though we do not have any concerns about his ability to serve as an objective director, we recognize that Rasulo’s potential presence might create added friction on the board,” ISS said.

ISS also advised against shareholders voting for Blackwells Capital’s three nominees.

Disney has nominated their 12 current directors. ISS suggested shareholders do not re-elect Maria Elena Lagomasino.

Disney chairman Mark Parker responded in a statement:

[W]e strongly believe that ISS reached the wrong conclusion in its recent report when it comes to adding Nelson Peltz to the board. In contrast to Glass Lewis, ISS fails to acknowledge the breadth of perspective and expertise Ms. Lagomasino adds to the board. The strong recent performance and results overseen by the Disney board demonstrate our focus on long-term shareholder value creation and succession planning and our commitment to good governance practices.

Glass Lewis, a different proxy advisory company, supports Disney’s Board nominees.

Disney also referenced Ike Perlmutter’s involvement with Trian in their statement. Perlmutter handed control of his Disney shares to Trian, giving them significantly more power.

“In its report,” Disney states, “ISS agrees that Perlmutter’s involvement is ‘an unfortunate distraction’ and that he ‘may cast a baleful shadow over the board’ if Peltz is elected.”

This dynamic is relevant to assessing the Trian Group’s nominees, as Mr. Perlmutter has a fraught history and longstanding personal agenda against Disney’s CEO, Robert A. Iger, which would likely inhibit Nelson Peltz from working constructively with Disney’s Board, threatening the company’s continued turnaround.

Other CEOs Support Nelson Peltz

Trian also shared a letter from various other executives supporting Peltz on the website RestoreTheMagic.com.

As directors who have worked with Nelson Peltz at some of the world’s most respected companies, we are writing to convey our experience with Nelson in the boardroom and to encourage you to work with him for the benefit of all shareholders.

Some of us, like you, were skeptical about Nelson and were initially opposed to the notion of having him on our boards. Some of us worried that he might derail the successful execution of our strategy.

However, after having worked with Nelson, we know that our concerns were misplaced. The companies for which we served as board members alongside Nelson were improved because of his presence on the board.

The undersigned executives are from The Home Depot, Procter & Gamble, PPG Industries, Corus Entertainment, Janus Henderson Group, Wendy’s, Heinz, and more.

Disney’s supporters include the JPMorgan Chase CEO, “Star Wars” creator George Lucas, former Imagineer Bob Weis, and the grandchildren of Walt and Roy Disney.

Shareholder votes will be tallied during Disney’s 2024 annual meeting on April 3.

Source: Variety

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