Entertainment giant Walt Disney (NYSE:DIS) is up against billionaire investor Nelson Peltz for a proxy contest. The activist investors’ Trian Fund Management said it is seeking to elect Peltz to the company’s Board of Directors. However, Disney is opposing the move.
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Trian Fund Management announced that the company would file a proxy statement with the SEC for the election of Nelson Peltz to DIS’ Board of Directors at its annual shareholders’ meeting. Trian owns about 9.4 million Disney shares, roughly valued at $900 million.
In response to Trian’s nomination, Disney recommends its shareholders to support its nominees rather than Peltz.
Backing the move, Trian, in a presentation called “Restore the Magic,” said that Disney is in “crisis” despite its stellar brands and intellectual property. Trian pointed out that DIS stock is near its eight-year low, irrespective of the company’s move to bring back its former CEO, Robert Iger, at the helm. Further, Trian pointed out that Disney’s total shareholder return has significantly underperformed the S&P 500 (SPX).
Trian listed Disney’s failed succession planning, over-the-top compensation practices, flawed Direct-to-Consumer strategy, increased financial leverage, and elimination of dividends as some of the key issues.
Trian also highlighted that it is not looking to replace Iger. Instead, it is pushing for successful CEO succession. Further, it is not advocating for the breakup of Disney and expects the company to orderly deleverage its balance sheet.
What Is the Prediction for Disney Stock?
Disney stock carries a Strong Buy consensus rating on TipRanks based on 17 Buys and four Holds. Meanwhile, DIS’ price target of $119 implies 23.53% upside potential.
Besides for analysts, hedge funds are also bullish about Disney’s prospects and bought 2.9M shares last quarter. Disney has an Outperform Smart Score of nine.
