The ‘little guy’ may have the biggest say in Disney’s $70 million proxy fight

The fierce boardroom battle over Disney’s direction heads to a vote during the week of March 31. It is expected to be the most expensive proxy fight in history, with all sides dropping a collective $70 million to influence shareholder votes.

Disney’s main foe is activist investor Nelson Peltz, who wants two seats on the board: One for him and one for Jay Rasulo, a former Disney CFO who left after being passed over for a promotion to chief operating officer.

Disney is doing the bulk of the spending to push for its chosen board of directors at an estimated $40 million, while Peltz’s Trian Partners expects to drop $25 million to Blackwells Capital’s $6 million. The latter two are separately challenging the company line. 

Peltz is no stranger to forcing expensive fights over board seats. He holds the current record for the most expensive proxy fight with Procter & Gamble in 2017. That fight cost $60 million and is one of the closest proxy battles in corporate history. After a near-tie and multiple recounts, Peltz reportedly lost the vote but P&G conceded in giving him a seat on the board anyway.

Now setting his sights on Disney for a second time – he first angled for a board seat one year ago before dropping the fight – Peltz and Trian Partners argue, “Disney has lost its way over the past decade. Shareholders have suffered greatly, losing tens of billions of dollars in value.”

“We’re here to make that stock go up for the right reasons,” Peltz said in a video aimed at Disney shareholders. “We’re here to get this company back to earning money, generating cash flow, fixing the streaming business. Here’s a company that has disappointed and underperformed the S&P for one year, three years, five years, 10 years, forever. That’s how long they’ve been disappointing shareholders.”

Over the past five years, the S&P 500 index is up more than 81% while Disney is up 5.65% as of Monday morning, April 1.

One of Peltz’s biggest gripes is continued losses in Disney’s streaming business. In a 133-page white paper, he suggests, among other things, combining Hulu with Disney+. 

Despite the underperforming stock track record over the past several years, Disney argues that under returning CEO Bob Iger, the company is in the middle of righting the ship. 

In 2024, Disney’s stock has far outpaced the S&P 500 benchmark, rising 34% compared to S&P’s 10%. The company is also going after Peltz’s track record in a series of attacks meant to sway shareholders.

“Nelson Peltz has a long history of attacking companies to the ultimate detriment of shareholder value. His quest also seems more about vanity than a belief in Disney,” Disney said in a video to shareholders.

Part of what is making this fight over board seats so expensive, possibly record-setting, is that around 40% of Disney’s shareholders are regular people, not big funds. The New York Times said for the average public company, individuals usually own around 15%.  

It’s costly to reach a large number of small investors. In this proxy fight, it could be Average Jane and Joe who tip the scales at Wednesday’s annual shareholders meeting. At stake are the futures of Disney+, Hulu, ESPN, ABC, movie studios like Marvel, and of course, the happiest places on Earth.