Svea Herbst-Bayliss and Don Chmielewski
NEW YORK (Reuters) – Walt Disney (NYSE:) appears to have pulled ahead of activist investors in the battle for board seats and the future of the global entertainment conglomerate, with more than half of all shares voted ahead of the company’s annual meeting on Wednesday.
T. Rowe, who owns about 11.7 million Disney shares, representing about a 0.64% stake, supported the company and said she voted to re-elect Maria Elena Lagomasino and Michael Froman, two Disney directors being challenged by Nelson Peltz’s Trian Fund. Control.
The company scored another victory Monday as it appears to have secured the backing of another powerful investor, Disney’s second-largest shareholder BlackRock (NYSE:), according to people familiar with the matter. BlackRock declined to comment.
While the support of large institutional investors could give Disney an edge in the proxy battle, people involved in the analysis of shareholder votes caution that the results could still change as more votes are cast on Tuesday. Even those who have already voted have a chance to change their minds.
Disney executives, activist investors Trian and Blackwells Capital, and armies of call center employees are ringing the phones in a last-minute effort to persuade voters to elect board candidates.
Disney wants shareholders to elect all 12 of its current directors, while two hedge funds, Trian and Blackwells, are vying for their seats.
The board battle comes at a pivotal time for Disney as it tries to revitalize its creative franchises, make its streaming business profitable and find partners to help build ESPN’s digital future. CEO Bob Iger called the activist campaigns a “distraction.”
Disney’s stock price is up 34% in 2024 but remains down nearly 40% from its all-time closing high in March 2021.
Trian, the Peltz billionaire investor, is seeking two spots: one for himself and one for former Disney CFO Jay Rasulo.
On Monday morning, Trian again said in materials sent to investors that current Disney directors Lagomasino and Froman – “one of whom is an adviser to wealthy families and the other with experience in international relations” – lack relevant skills.
Blackwells Capital portfolio manager Jason Aintabi, who is seeking three board seats, is urging investors to vote for anyone other than Peltz, people familiar with his calls say. He also calls on the company to develop a plan to implement artificial intelligence and consider splitting its theme park and hotel assets into a real estate investment trust.
Iger, who was hired after his retirement in 2022 to run the company for a second time, is calling shareholders to tell them his transformation is already underway and there is no need to distract activist investors in the boardroom, people familiar with the calls say. Other Disney board members are also reaching out to investors, the people said.
Disney did not respond to requests for comment.
“Each side has hundreds of people calling investors who have either already voted and we want to change their vote, or they haven’t voted at all and we want to get them involved,” a person with first-hand knowledge of the situation. vote said Monday.
SUCCESSION PLANNING
On Monday morning, Disney board member Carolyn Everson, who joined the company in 2022 as billionaire investor Daniel Loeb’s hedge fund Third Point was pushing for changes, responded to criticism that Disney’s board had failed in succession planning. The board brought Iger back after the tumultuous tenure of his hand-picked successor, Bob Chapek.
Everson said the board is making progress and considering internal candidates who are being trained by Iger, as well as considering external candidates.
“This is the board’s No. 1 job and we take it very seriously,” Everson told CNBC.
The company’s annual meeting, which will be held virtually, is scheduled for 1:00 pm ET on Wednesday.
The opportunity to influence shareholders remains as each side rushes to recruit mutual fund portfolio managers and management teams that vote shares owned by the big index funds – Vanguard, BlackRock and State Street (New York Stock Exchange:).
The Wall Street Journal first reported that BlackRock appears to have voted for Disney. Vanguard and State Street could not be reached for comment Monday.
While Disney has an unusually large number of non-institutional shareholders who control between 35% and 40% of the company, the vote will ultimately depend on how the index funds vote.
Vanguard owns 8.2% of Disney’s outstanding shares, while BlackRock and State Street each hold about 4%.
However, neither team is ready to take a victory lap yet. Each side recently scored several victories after Peltz received a recommendation from trusted consulting firm Institutional Shareholder Services that shareholders should elect him.
The entertainment giant is counting in part on shareholders to succumb to the support of what one source called an “all-star parade,” including “Star Wars” creator George Lucas, Emerson (NYSE:) Collective founder Laurene Powell Jobs and JPMorgan Chase (NYSE:) Chairman ) Jamie Dimon, all of whom supported Iger and the current board of directors.