Amid a persistent decline in Walt Disney Co DIS shares, activist investor Nelson Peltz is escalating his attempts to secure board seats at the company, insiders have disclosed.
What Happened: Peltz’s firm, Trian Fund Management, which has become one of Disney’s most significant investors with a stake exceeding $2.5 billion, is pursuing multiple board positions, including one for Peltz, the Wall Street Journal reported, citing people familiar with the matter.
Should Disney dismiss the request, Trian reportedly has the option to propose directors for a vote at Disney’s annual meeting in the spring. Shareholders have from Dec. 5 to Jan. 4 to nominate, according to Disney’s proxy documents.
See Also: How To Buy Disney (DIS) Stock
Despite an unsuccessful attempt to secure a board seat earlier this year, Peltz withdrew his nomination following Disney’s restructuring and cost-cutting plan which momentarily increased the stock value. Since then, Disney’s shares have dropped from over $113 to roughly $80, nearing a decade low.
The belief at Trian is that Disney’s shares are substantially undervalued and calls for a board more accountable and in line with shareholders’ interests.
Why It Matters: Trian has recently augmented its stake to more than 30 million shares, a significant rise from the nearly 6.4 million shares held at the end of the second quarter. According to an article on Benzinga from January, Peltz had been planning a proxy fight for a board seat, which was unsuccessful.
Then, in February, Benzinga reported that that Peltz declared victory after Disney announced plans to cut 7,000 jobs and its shares increased.
In the original confrontation, Trian pressured Disney to prepare for a successor for then-CEO Bob Iger and criticized the company’s excessive compensation and lack of cost control.
Disney countered by initiating a succession-planning committee and claiming that Peltz had a limited understanding of the media industry. Currently, the company is on course to reinstate its cash dividend by the end of 2023, suspended during the COVID-19 crisis.
Price Action: Disney shares closed over 2.6% higher at $82.94 on Friday, but are down 6.8% so far this year, according to data from Benzinga Pro.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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