The Walt Disney Company is facing a proxy war from a group of activist investors led by billionaire Nelson Peltz who want to shake up the board and the strategy of the media giant. The heirs of Walt and Roy Disney, the brothers who founded the company in 1923, have publicly expressed their support for CEO Bob Iger and his vision for the future of Disney.

The Activist Investors’ Agenda

Peltz, who runs Trian Fund Management, has been pushing for changes at Disney since January 2023, when he first sought a board seat for himself. He was rejected by the company, which said he lacked the “skills and experience” to serve on the board. Peltz then launched a proxy fight, nominating himself and former Disney chief financial officer Jay Rasulo for two board seats and proposing a series of reforms that he claimed would boost Disney’s performance and shareholder value.

Some of the changes that Peltz wants to see include:

• Cutting costs and increasing margins across all segments, especially in the streaming business, where he says Disney is spending too much and earning too little compared to Netflix.
• Divesting non-core assets, such as ESPN, ABC, and the theme parks, and focusing on the core entertainment business of movies, TV shows, and streaming.
• Improving the succession planning for the CEO position, which he says is unclear and risky, given that Iger is set to retire in 2024,

Peltz has also criticized Disney’s investment plans, calling them a “spaghetti against the wall plan” that lacks focus and direction. He has accused Iger of being too optimistic and complacent about the challenges and opportunities facing the company.

The Disney Heirs’ Response

The descendants of Walt and Roy Disney, who together own about 3% of the company’s shares, have strongly opposed Peltz’s campaign, calling him a “corporate raider” and a “hedge-fund-backed opportunist” who is only interested in making a quick profit for himself and his allies. They have also warned that Peltz’s proposals would destroy the “Disney magic” and the legacy of their ancestors, who built the company with passion, creativity, and innovation.

In two separate letters to the shareholders, nine of the founders’ grandchildren have urged them to vote for Iger and the current board and to reject Peltz and Rasulo. They have praised Iger for his leadership and vision and for growing the company in a modern world. They have also highlighted some of the achievements and initiatives that Iger and his team have accomplished or planned, such as:

• Acquiring Pixar, Marvel, Lucasfilm, and 21st Century Fox, and creating a diverse and rich portfolio of content and franchises that appeal to audiences of all ages and backgrounds.
• Launching Disney+, Hulu, and ESPN+ and becoming a global leader in the streaming market, with over 300 million subscribers and growing.
• Investing in new technologies, such as artificial intelligence, virtual reality, and blockchain, and exploring new ways to enhance the customer experience and engagement.
• Expanding the global presence and reach of the company, especially in emerging markets such as China, India, and Africa, where there is huge potential for growth and innovation.

The Disney heirs have also expressed their confidence and trust in Iger and the board and their ability to navigate the challenges and opportunities ahead. They have said that they are proud of the company and its values and that they want to preserve and protect it for future generations.

The Outcome of the Proxy War

The proxy war between Peltz and Disney will be decided by the shareholders, who will cast their votes at the annual meeting on March 10, 2024. According to the latest reports, Peltz faces an uphill battle, as most of the institutional investors and proxy advisory firms have sided with Disney and endorsed Iger and the board. Peltz has also faced some setbacks, such as the withdrawal of support from former Marvel chairman Isaac Perlmutter, who had initially joined forces with him.

However, Peltz has not given up and has continued to lobby and campaign for his cause. He has also claimed that he has the support of some of the individual and retail investors, who make up about 40% of the shareholder base. He has argued that his proposals are in the best interest of the company and the shareholders and that he is a long-term investor who loves Disney and wants to help it grow and thrive.

The outcome of the proxy war will have significant implications for the future of Disney, as it will determine the direction and strategy of the company and the leadership and governance of the board. It will also reflect the sentiment and preference of the shareholders, as well as their confidence and satisfaction with the current management and performance of the company.