Disney is currently facing a proxy fight, a situation where a group of shareholders joins forces to gather enough shareholder proxy votes to win a corporate vote. Trian Fund Management Firm, led by Nelson Pletz, has filed a formal proxy challenge against the company, claiming that Disney overpaid for the assets of 21st Century Fox and expressing doubt in the competency of the existing board. The investment firm has purchased an $800 million stake in the company in November in order to angle for a position for Peltz on Disney’s board of directors.
This is the first formal proxy fight in the Walt Disney Company's 100-year history and marks a significant development in the company's corporate drama.
Disney had faced a similar situation in 2004, when Walt Disney's own nephew, Roy E. Disney, led a charge against then-CEO Michael Eisner for falling theme park attendance and floundering animation studios. Eisner, who was responsible for the success of Disney Animation during his tenure, had lost the touch of the company's legacy according to Roy Disney. Despite repeated calls for Eisner to resign, he held on to his position until Roy Disney resigned from the board and sought out investors for a proxy fight. Eventually, his efforts proved successful and Eisner was ousted in favor of Bob Iger.
Fast forward nearly 20 years, and history seems to be repeating itself.
After Bob Chapek was ousted as CEO in favor of Iger again, Disney's position in this proxy fight is an uphill battle. Despite a brief rise in stock prices immediately following Iger's reinstatement, shares have continued to fall in the weeks since. A corporate shake-up is already taking place and sweeping changes have recently been implemented for Disney Parks to try and turn the tide. The company's management is trying to appease anxious investors who may be tempted to side with Peltz and his team.
The outcome of this proxy fight will have a significant impact on the future of the company and its shareholders.
Image: Disney
