Disney gains momentum in battle for board seats against activist investors

Disney gains momentum: Walt Disney has taken a lead over activist investors in the struggle for board seats and the future direction of the global entertainment conglomerate, with more than half of all shares voted ahead of the company's annual meeting on Wednesday.

T Rowe Price, a major shareholder in Disney, supported the company's stance by voting to re-elect Maria Elena Lagomasino and Michael Froman, the two directors challenged by Nelson Peltz's Trian Fund Management.

In a major boost for Disney, sources familiar with the matter revealed that BlackRock, the second-largest shareholder in the company, appeared to be backing Disney as well.

While institutional investor support gives Disney an advantage in the proxy battle, ongoing vote counting indicates that outcomes could still change as more votes are tallied. 

Even those who have already voted retain the option to alter their decision.

Top executives at Disney, along with activist investors Trian and Blackwells Capital, have engaged in last-minute efforts to sway voters in favour of their respective board candidates.

The battle for board seats comes at a crucial juncture for Disney, as it aims to revitalise its creative franchises, make its streaming business profitable, and navigate the evolving landscape of digital entertainment. CEO Bob Iger has labelled the activist campaigns as a “distraction.”

Despite a 34 per cent increase in Disney's stock price in 2024, it remains nearly 40 per cent below its record high close in March 2021.

Nelson Peltz's Trian Fund Management seeks to secure two board seats, one for Peltz himself and another for former Disney CFO Jay Rasulo.

Meanwhile, Blackwells Capital, advocating for three board seats, is urging shareholders to vote against Peltz and pushing for strategic initiatives such as artificial intelligence (AI) integration and potential restructuring of Disney's theme park and hotel assets.

Iger and other Disney board members have been actively reaching out to shareholders to stress the progress of Disney's transformation and discourage the influence of activist investors.

As the annual meeting approaches, both sides continue their efforts to sway shareholders, targeting portfolio managers at mutual funds (MFs) and stewardship teams overseeing shares held by major index funds.

The outcome remains uncertain, with the vote likely hinging on decisions made by influential index funds such as Vanguard, BlackRock, and State Street.

Despite recent wins for both sides, the final verdict in this boardroom battle remains to be seen.

(With Reuters Inputs)