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Nelson Peltz outlines plans for Disney proxy battle

by SuperiorInvest

Activist investor Nelson Peltz.

David A. Grogan | CNBC

disney and its investors are going to start hearing a lot from activist investor Nelson Peltz.

In the coming weeks, Peltz’s Trian Fund Management plans to post on former CFO of Disney. Jay Rasulo to the Disney board of directors. That document will be released in a couple of weeks, Peltz said in an interview with CNBC after appearing on “Squawk on the Street” earlier Thursday.

In February, Trian plans to meet with representing attorneys Glass Lewis and ISS, after which it will begin lobbying shareholders through March and Disney’s planned annual shareholder meeting. Trian hopes the meeting will be in April. Disney’s annual meeting last year was April 3rd.

Trian filed a draft proxy statement Thursday, which outlined some of the reasons why Peltz believes Disney shareholders should elect him and Rasulo to the board of directors as they push to improve its stock performance. Those include getting Disney’s streaming profit margins to between 15% and 20% by 2027. Disney’s streaming business is currently losing money and won’t break even until later this year, the company said. CEO Bob. Iger has said.

Trian wants Disney to be more transparent with its business. Disney plans to launch a direct-to-consumer ESPN service later this year or in 2025, as the sports network’s traditional cable subscription model fades away. Before its debut, Trian wants specific short-term profitability targets to ensure it is a viable business.

“What they really need is accountability,” Peltz said.

After it reports its results on February 7, Disney will release its final proxy materials, including the date of the annual meeting.

Typically, both Trian and Disney will present their arguments to proxy advisory services Glass Lewis and ISS, followed by a request to shareholders and recommendations from the companies. This advice is essential because it can influence large investors and index funds. Typically, neither party knows who is winning until days or hours before the annual meeting because those big investors often vote late in the process.

The dynamic duo

Trian has taken aim at Disney’s board of directors for being too connected to Iger, who renewed his contract five times to delay his retirement. Iger has said that she plans to leave Disney in 2026 and has been actively searching for a successor since he returned to Disney in late 2022.

Peltz has been on several boards of directors, including Supervisor and bet and mondelez, who have appointed new general directors. Peltz said his success in searching for top executives is part of the reason he should join Disney’s board of directors.

“I do a lot of executive searches,” Peltz said. “I’m like a headhunter.”

While Peltz outlined why he believes Disney’s stock performance can improve with his presence on the board, he’s still just one person. Even if Rasulo is elected, they will still be just two voices on a Disney board that Peltz has criticized for being in Iger’s pocket.

Still, Peltz said sometimes boards simply need to be buoyed by people who aren’t afraid to question longtime CEOs like Iger.

“We’re going to be Batman and Robin,” Peltz said. “Boards can change quickly if they start hearing some good points.”

WATCH: Full CNBC interview with Trian Partners founding partner Nelson Peltz

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