Nelson Peltz’s seat on the Disney board depends on Vanguard, State Street and institutional investors

Bob Iger and Nelson Peltz.


In 2015, Nelson Peltz’s Trian Partners lost in an activist campaign against a chemical company DuPont, largely because the three largest institutional shareholders voted against his proposal. Almost a decade later, the same institutional investors – Vanguard, Federal highway And BlackRock – are the three largest shareholders in Disney. And they could make or break Peltz’s campaign against the board that supports CEO Bob Iger.

BlackRock, a 4.2 percent Disney shareholder, supports management, reported the Wall Street Journal Monday. T. Rowe Price and Norway’s sovereign wealth fund, both smaller shareholders but household names, confirmed to CNBC that they also support current management.

It’s not clear whether Vanguard and State Street voted or which side they would support.

Trian already has fighters in his corner. Former Marvel Chairman Ike Perlmutter has entrusted Peltz with his 33 million Disney shares, most of the activist’s 1.8 percent stake. New York pension fund Neuberger Berman and the California Pension Plan (CalPERS) said they supported the activist. Peltz also gained the support of proxy advisory firms ISS and Egan Jones.

The showdown between Trian Partners and Disney addresses some of the most complex issues facing leaders today, be it CEO succession or the role of corporations in addressing it so-called “woke” social problems.

Disney says Peltz’s efforts are a distraction from Iger’s efforts to turn the company around. Trian argues that Peltz’s expertise would help the company find a second successor to Iger and repair its underperforming stock.

Both sides have been representing investors for months in media appearances, conferences, individual dinners and meetings with top investors. But institutional alignment will be critical at Disney. Only 33% of shareholders are retail investors, which is a significant number, but they are less likely to vote than their institutional peers.

Vanguard is the largest holder, with 8% of Disney shares outstanding. It may overstep its bounds in deciding whether to elect the dissidents to the Disney board. That’s because, like a political election, not everyone eligible to vote will vote at Disney’s shareholder meeting.

For example, in 2021, 63% of Disney shareholders voted for their shares, according to data analyzed by 13D monitor.

In a contested election, that number is likely to be much higher as voting rights lawyers on both sides court shareholders, said Ken Squire of 13D Monitor.

“With the introduction of the universal proxy card, voter turnout is also expected to increase,” Squire told CNBC.

Disney has appointed Innisfree M&A to handle the tender. Trian splits the load between Okapi Partners and DF King.

Courting well-known institutions and private investors

Visitors in front of Cinderella Castle at Tokyo Disneyland in Tokyo, Japan, on January 17, 2023.

Bloomberg | Bloomberg | Getty Images

Retail investors have seen advertisements or received emails or phone calls urging them to vote for either Disney, the white proxy card, or Trian, the blue proxy card. According to the Wall Street Journal, more than half of the votes in the fight had already been counted as of Monday.

“Shareholders can change their minds, but unlike most institutional investors, individual shareholders start voting as soon as they receive the proxy. So most of the individual votes have already been accounted for,” John Ferguson, senior partner at proxy advisory firm Saratoga Proxy Consulting, told CNBC.

Lawyers’ job is to court retail investors, although courting and attracting institutional investors is a greater priority. Advisers on both sides have tried to win support from Vanguard, Blackrock and State Street.

It would be a huge vote of confidence in Iger’s leadership of Disney if he were to win the support of the undecided Vanguard or State Street.

But if Peltz manages to win the support of these investors, it would be a clear signal to Wall Street that the activist’s concerns persist at Disney – the failed succession process, an apparent diversion from storytelling in favor of “messaging” and an expensive merger and investment strategy – have some value.

As proxy advisors, the chances that institutional investors would be influenced by Peltz’s arguments increased ISS partially supported Peltz in March.

Proxy advisors help shareholders decide how to vote their shares on a specific issue by analyzing a company’s financials and meeting with their advisors. As with institutional investors, their support is strongly sought by advisors on both sides.

Glass Lewis, the other major proxy advisory firm, announced it would support Iger and the existing board.

ISS said shareholders should vote for Peltz and withhold their support for Maria Elena Lagomasino, one of the two current Disney directors Trian is seeking to replace. They did not support the other Trian candidate, former Disney CFO Jay Rasulo.

REGARD: According to ISS, Disney shareholders should elect Nelson Peltz to the board

Proxy advisory firm ISS recommends Disney shareholders elect Nelson Peltz to the board

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