Disney sees renewed proxy fight – how big a threat?

The Walt Disney Company (NYSE:DIS) might be facing another proxy fight as an activist investor now seeks two board seats. But many business journalists and other commentators might be exaggerating this investor’s power. In fact, though he has increased significantly his stake in the company, he won’t impress the top two shareholders.

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Disney stock stands at about $84.50 a share at time of writing, which is down 2.50 percent year-to-date. This puts it near the bottom of its 52-week trading range, which is $78.73 to $118.18.

Nelson Peltz, head of Trian Fund Management, now owns more than 30 million shares, with a value of $2.5 billion. This is a sharp rise from its 6.4 million share holding in February of 2023. Peltz tried to buck for a seat on Disney’s Board then, but had to withdraw, according to Reuters. He told everyone then that Disney was working on improving share value, so his sitting on the Board was unnecessary.

Disney stock is down 30 percent since February, so Peltz is back, now asking for two Board seats. Evidently he’ll hold one and give the other to a close ally. And many influencers are breathlessly anticipating that Peltz will lead the charge to stop the “woke nonsense” at the company.

But CNN Business gives a snapshot of the obstacle he faces.

Who owns how much?

At time of writing, CNN listed these top ten owners of the company:

If Trian Fund Management owns 30 million shares, then it owns 1.64 percent of the company. That would make them the number-six owners, and knock BlackRock Investment Management out of the Top Ten. But that still leaves Vanguard and BlackRock Fund Advisors as the number-one and number-two owners. Between them, these two Kings of Woke own 11.9 percent of Disney.

To complete the “hostile takeover” that some influencers are predicting, Trian needs proxies that collectively control nearly half the company. Sixty-five percent of the company is in the hands of institutional investors. So gathering proxies worth a controlling stake will be supernally difficult.

What is Trian after?

Trian Fund Management has a reputation for buying into a trouble company and agitating for positive change that enhances value. That could mean spinning off parts of the company that are dragging the rest of it down. In the extreme case it could mean dissolution. Peltz has already criticized Bob Iger, the present CEO of Disney, for some bad decisions. Speicifically, Pelts thinks that:

• Disney paid far too much for Twentieth Century-Fox Studios in or about 2018.
• Disney’s streaming operations cost far more than they need to, by reason of “lack of cost discipline,” according to Variety.

Still, Peltz wants two seats on an eleven-member board – eighteen percent of the votes – while he owns 1.6 percent of the company. One can only imagine Larry Fink, BlackRock’s head and the Chief Architect of Woke, laughing at him and saying, “You’re playing with the Big Boys now.” (With apologies to DreamWorks SKG for borrowing from their animated movie The Prince of Egypt.)