In the ongoing dispute over restructuring Disney’s board, Institutional Shareholder Services (ISS), a prominent proxy advisory firm, has thrown its support behind activist investor Nelson Peltz. ISS recommended that Disney shareholders vote in favor of Peltz’s addition to the board during the upcoming annual shareholder meeting scheduled for April 3rd. Additionally, ISS advised supporting 11 out of the 12 nominees put forth by Disney.
Furthermore, ISS advised against voting for three nominees proposed by another activist investor, Blackwells Capital. This stance underscores ISS’s alignment with Peltz’s vision for Disney’s board restructuring.
ISS’s recommendation to endorse Peltz’s addition to the board is rooted in the belief that his involvement could provide reassurance to investors regarding the board’s engagement in the succession process and its ability to make informed decisions about future capital allocation. Peltz’s track record and experience in corporate governance likely influenced ISS’s decision to back his candidacy.
By supporting Peltz and most of Disney’s nominees, ISS aims to advocate for a balanced approach to board composition that incorporates both existing leadership and new perspectives. This endorsement carries significant weight among institutional investors and can influence the outcome of the shareholder vote at the upcoming meeting.
Disney Hits Back
In response to ISS’s recommendation to vote for Nelson Peltz’s addition to the board, Disney has expressed disagreement, asserting that its 12 board nominees are the most qualified to ensure diligent management and deliver sustainable shareholder value. Disney contends that Peltz lacks additional skills beneficial to the board and has not presented a substantial plan to enhance shareholder value.
The proxy battle between Disney and Peltz stems from their disagreement over Disney’s strategic direction and initiatives aimed at enhancing growth. Peltz, through his investment firm Trian Fund Management, initiated a proxy contest with Disney in January 2023. Trian contested Disney’s strategy, citing the subpar performance of DIS stock compared to the overall market. Additionally, Trian criticized Disney’s perceived shortcomings in succession planning, executive compensation practices, debt levels, and Direct-to-Consumer strategy.
The heirs of Walt and Roy Disney, the founders of the entertainment giant, have previously supported Disney’s CEO, Robert Iger, in the proxy fight. Additionally, Glass, Lewis, a proxy voting and corporate governance advisory firm, has advised shareholders to vote for all 12 of Disney’s director nominees. These endorsements highlight the divide between Disney’s management and Peltz regarding the company’s strategic direction and governance.