Disney faces a power struggle from activist investor Nelson Peltz

Activist investor Nelson Peltz wants a seat in walt disney board, saying he wants to “restore the magic” to the entertainment and media company.

Peltz’s Trian Group filed a preliminary lawsuit representation statement Thursday with the Securities and Exchange Commission seeking the position after announcing their intentions Wednesday.

Peltz said in the Trian news release that Disney has lost its way in recent years, “resulting in a rapid deterioration in its financial performance from a high free cash flow generating business that consistently pays dividends to a highly leveraged company with reduced earning power and weak free cash flow conversion.

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Nelson Peltz, founding partner of Trian Fund Management, speaks at the WSJD Live conference in Laguna Beach, California on October 10, 2019. 25, 2016. (Reuters/Mike Blake/Reuters Photos)

In a presentation that accompanied the securities presentation, Trian noted that Disney’s total shareholder return has “significantly outperformed” the S&P 500 and its proxy peers over periods of one, three, five and 10 years.

“We believe current investor sentiment about Disney is low, reflecting the hard truth that Disney is a company in crisis and faces many challenges that weigh on the company’s investment prospects,” the filing said.

Disney shares are down more than a third in a one-year period. The S&P 500 is down by half, just over 15%.

“As a highly engaged shareholder serving on the Disney Board, my goal would be to work collaboratively with Bob Iger and other directors to take decisive action that results in improved operations and financial performance, increased shareholder value, and a robust planning process. of succession that will set the stage for long-term sustainable growth,” he added.

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disney’s answer

Trian Fund Management believes that the Walt Disney Company has lost its way under current leader Bob Iger. (Charley Gallay/Getty Images for Disney/Getty Images)

On Wednesday, Disney announced mark parkera member of the company’s board of directors for seven years and CEO of Nike, he would become the new chairman of the board.

In the announcement, former board leader Susan E. Arnold said: “During his four decades at Nike, Mark has led one of the world’s most recognized consumer brands through several market evolutions and a successful transition. of CEO”.

“He is in a unique position to chair the Disney Board during this period of transformation,” he added.

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The Trian and Disney connection

Cinderella Castle in Magic Kingdom at Walt Disney World. (Digital Fox News/Fox News)

Trian currently owns approximately 9.4 million shares of Disney common stock, a company valued at approximately $900 million.

Despite Disney’s significant advantages, recent share price and operating performance have been disappointing, Trian said in his Jan. 2 report. 11 pitches.

Shares of the entertainment giant are currently trading near an eight-year low, despite the company’s recent decision to rehire Bob Iger as chief executive, Trian said.

The investor noted that adjusted earnings per share fell 50% from fiscal 2018.

The dispute with Disney could be Peltz’s biggest proxy battle since an acrimonious fight for a board seat at detergent maker Tide, P&G. During his more than three-year tenure on the P&G board, the company’s stock price rose nearly 80%.

Disney has also faced pressure from Third Point’s Daniel Loeb to spin off cable sports channel ESPN, update its board and buy Comcast’s stake in Hulu, which has some 46 million subscribers.

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Walt Disney did not immediately respond to inquiries from FOX Business.

Reuters contributed to this report.