“Disruptive and destructive.” That is how Disney has referred to the activist investors who are pushing for seats on its board and influence over its strategy.
In return, the activists have called Disney “stupid” and mocked its purported turnaround as “a fanciful tale.”
Which side will prevail?
One of the largest, priciest and nastiest proxy contests in history will come to a head on Wednesday, when Disney is scheduled to virtually host its annual shareholder meeting. Trian Partners, an activist hedge fund run by Nelson Peltz, 81, has demanded two board seats and spent roughly $25 million pressing its case to other shareholders — to get them to vote for its candidates. A smaller activist investor, Blackwells Capital, is seeking three seats.
Disney has put forward its own slate of 12 directors and has said its get-out-the-vote campaign would cost up to $40 million.
At first, Robert A. Iger, Disney’s chief executive, seemed poised to easily defeat Trian. (Blackwells was never much of a threat.) Prominent Disney shareholders like George Lucas and Laurene Powell Jobs lined up to back him. Disney family members, including Abigail E. Disney, blasted Trian and Blackwells as “wolves in sheep’s clothing.” Analysts (Guggenheim, Macquarie) and shareholder advisory firms (Glass Lewis, ValueEdge) threw cold water on Mr. Peltz’s campaign.
But it has evolved into a much closer contest.
Mr. Iger’s job is not at stake. Now 73 and in his second stint as chief executive, he has vowed to leave Disney for good at the end of 2026. A loss, however, would taint his legacy — and potentially disrupt the company’s approach to streaming, theme park expansion and even the messages embedded in its movies.
Here is what to know.
Disney is likely to win, but there are no guarantees.
In recent days, Disney has received crucial support in its effort to keep the dissidents off its board. BlackRock, which owns about 80 million Disney shares, voted to elect Disney’s slate on Monday, as did T. Rowe Price, which owns about nine million. Vanguard, which owns about 146 million shares, gave Disney its vote on Tuesday.
But the activists also have supporters. ISS, an influential proxy advisory firm, partly sided with Mr. Peltz, criticizing Disney’s succession planning. Mr. Peltz also won the backing of Egan-Jones, another advisory firm; it faulted Disney for unnecessarily veering into what it called “the killing fields of the culture wars.”
In voting for Mr. Peltz, the California Public Employees’ Retirement System, or CalPERS, which owns about 6.6 million Disney shares, said the company would benefit from “fresh eyes.” It added that Mr. Peltz was “capable of leading needed change in corporate governance.”
Voting can take place until the last minute.
Soon after the meeting starts at 10 a.m. Pacific time, Trian and Blackwells will have an opportunity to speak. Horacio Gutierrez, Disney’s general counsel, will then announce that the polls have closed and announce the preliminary results.
Close elections are sometimes contested. In 2017, Procter & Gamble announced that its preliminary count of proxy votes showed that it had fended off Mr. Peltz, who was seeking a board seat. A subsequent vote tally showed that Mr. Peltz won with a margin of 0.0016 percent. The company later said that certified results showed Mr. Peltz losing but added him to its board anyway.
The election is a referendum on Mr. Iger’s leadership.
While Mr. Peltz and Blackwells have sharply different views on how Disney should be managed — one wants “Netflix-like margins” of up to 20 percent in streaming, the other has floated splitting up the company — they have expressed the same basic motivation: Disney’s stock price is not high enough. The reason? Mr. Iger, they say, has not charted the proper course for Disney.
Shares were trading at about $122 on Tuesday, down from their peak of $197 three years ago.
Mr. Iger has responded like Captain America battling the ruthless Red Skull — that is, with startling force. He insists that a turnaround plan has taken hold and points to sharply improved financials, a new strategy for ESPN in the streaming age and a retrenchment at Marvel Studios to improve movie quality, among other initiatives.
Yes, Disney’s stock is down from three years ago, Mr. Iger has conceded. But it’s up from $81 six months ago.
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