"Don't Know Business" Disney Criticizes Activist Investor Seeking Board Membership

[Asia Economy New York=Special Correspondent Joselgina] "He does not understand Disney's business. He lacks the skills and experience to assist the board." Walt Disney has pointed out the lack of qualifications of Nelson Peltz, the famous activist investor and CEO of Trian Asset Management, who is attempting to join the board, and has announced that it will engage in a direct confrontation at the upcoming shareholders' meeting.

Activist investor Nelson Peltz, CEO of Trian Asset Management
[Image source=AP Yonhap News]

According to the New York Post and others, Disney stated this on the 17th (local time) in an investor presentation submitted to the U.S. Securities and Exchange Commission. Disney said, "Mr. Peltz does not know Disney's business well," and strongly criticized, "he also lacks the skills and experience to help the board protect shareholder value in the rapidly changing media ecosystem."

This is a rebuttal following Mr. Peltz's public criticism of Disney's operations last week and his demand for a board seat to check the current management. Earlier, Trian Asset Management also submitted a preliminary proxy solicitation filing to the authorities encouraging shareholders to vote in favor of Mr. Peltz's board entry.

In the materials released that day, Disney refuted each operational issue pointed out by Mr. Peltz and emphasized that the company is pursuing restructuring to reduce costs and maximize profitability. The mergers and acquisitions (M&A) undertaken so far were explained as part of efforts to increase company value and bring innovation for shareholders. Additionally, Disney criticized Mr. Peltz for not presenting any strategy to increase shareholder value. Furthermore, it confirmed its intention to confront Mr. Peltz, who demands board participation at the shareholders' meeting.

Typically, Disney holds its annual general meeting in early March. Led by CEO Bob Iger, Disney announced last week that it would appoint Mark Parker, former CEO of Nike, as the company's next board chairman. Ultimately, unless there is a separate agreement, it is expected that both sides will engage in a vote battle over board seats at this year's shareholders' meeting. The Wall Street Journal (WSJ) reported, "Disney is battle-ready," and "released materials defending CEO Bob Iger to shareholders, counterattacking activist investor Mr. Peltz."

Earlier, Mr. Peltz stated in his demand for a board seat that Disney is damaging shareholder value through excessive M&A and unprincipled business operations. He particularly claimed that Disney spent excessive costs on 21st Century Fox, saying, "Disney's once flawless balance sheet has become a mess." Trian Asset Management has a history of acquiring shares and entering the boards of global companies such as Procter & Gamble (P&G) and Wendy's. It is reported to hold about 9.4 million shares of Disney stock, worth approximately $900 million.