Trian reaffirms call for change in composition of Disney board

The Trian Group, which beneficially owns over $3.5B of common stock in The Walt Disney Company, reaffirmed its call for change in the composition of the Board of Directors of Disney and the commitment of its nominees, Nelson Peltz and Jay Rasulo, to work constructively with the Company’s Board and leadership team to drive long-term, sustainable value creation. The investment firm has issued a letter stating: “Trian believes that Disney is the most advantaged consumer entertainment company in the world. Over the last one, three, five and ten years, however, Disney has woefully underperformed its potential and its peers, costing shareholders more than $200 billion in value. Accordingly, Trian believes that change is needed. Ahead of the Disney annual meeting of shareholders on April 3, 2024, Trian encourages all shareholders to vote FOR its two candidates, Mr. Peltz and Mr. Rasulo, and to withhold support from two incumbent directors, Maria Elena Lagomasino and Michael B.G. Froman. Trian believes Disney’s problems lay at the feet of the Board, which lacks focus, alignment and accountability. Although the Board members are accomplished professionals, they are extraordinarily busy, have invested almost none of their own money in Disney stock and have failed to heed investor input. The result has been questionable strategic and capital allocation decisions, including the investment of $200 billion of capital without any discernible return, the demonstrable lack of alignment between executive compensation and shareholder value creation and financial results in the most recent year that pale in comparison to the results five years ago. Most recently, the Board botched its most important job – CEO succession – by installing Bob Chapek in that role seemingly without appropriate vetting or oversight. The Board then renewed Mr. Chapek’s contract just months before firing him for poor performance. Ultimately, the Board had to call Bob Iger out of retirement to fill the void. In this election contest, Disney has emphasized that Mr. Iger is admired and respected (including, for example, by service providers and advisors), which we do not doubt. Trian supports Mr. Iger as a candidate for the Board and as CEO. That Disney spends so much time and ink defending Mr. Iger – while saying almost nothing about the two director candidates whose reelection Trian is challenging – is both troubling and telling. This campaign is not about Mr. Iger, nor is it a referendum on his leadership. And in all events, Disney is, and must be, more than just one person, especially one whose contract expires in less than two short years. This election is a board election and the question before shareholders is: who should serve on the Board, helping the company on behalf of shareholders? We have nominated two candidates, Mr. Peltz and Mr. Rasulo, who have a shareholder mindset, extensive, relevant experience and a willingness to ask tough questions and set demanding goals. Mr. Peltz has served on eleven public company boards, including at some of the most respected companies in the world. Mr. Rasulo is the former Chief Financial Officer of Disney and knows the business well. Disney’s board seemingly does not want their help – claiming they will be “disruptive” – and prefers instead its hand-selected incumbents, an expert in foreign affairs and an advisor to wealthy families. Choosing between these slates, and voting for change versus more of the same, is really what this election is about. Our nominees’ goal is to delight Disney’s customers and to enhance value for all shareholders. To that end, Mr. Peltz and Mr. Rasulo look forward to working collaboratively with the executive team and Board – as they have done many times before at other companies – when they are elected. Mr. Rasulo worked in that manner at Disney previously. Mr. Rasulo and Mr. Iger worked side-by-side every day for more than five years as CFO and CEO, collaborating for the good of Disney shareholders. If elected, Mr. Rasulo would bring his extensive knowledge of Disney and its culture, people, operations and customers to the boardroom, and be an independent source of knowledge about the industry and the company. In 2019, Mr. Peltz was asked by Mr. Iger to address the Disney Board about shareholder sentiment in the media industry. Mr. Peltz was happy to do so, and the discussion was seemingly productive and interactive. More generally, Mr. Peltz has a reputation as a productive and insightful corporate director. His colleagues on corporate boards, across industries, have regularly renominated him as a director, and he has been elected by shareholders more than 50 times to serve as their representative – almost always garnering more than 90% of the vote. He did not amass that record by being disruptive or unproductive. Disney knows from its own experience that Mr. Peltz is a willing and helpful collaborator. But if there were any doubt, last week, thirteen of Mr. Peltz’s current and former colleagues wrote an open letter to Disney’s Board in which they said of Mr. Peltz that he: “entered the boardroom every meeting with an open mind, a focus on growth for the benefit of stakeholders and a commitment to working constructively towards our common goal of creating long-term shareholder value.” We believe that reelecting the existing Board will have the predictable effect of leading to more of the same: questionable strategic and capital allocation decisions, poor executive compensation alignment and suboptimal succession planning. Trian is convinced that Mr. Peltz and Mr. Rasulo can assist Disney with its challenges and help ensure a brighter future.”