Former Marvel CEO Ike Perlmutter owns the majority of the Disney stock that activist investor Nelson Peltz currently holds and is planning to use to strong-arm the company board to appoint him director, a recent report confirmed.
Nelson Peltz’s Early 2023 Proxy Fight Summary
This is expected to be Peltz’s second proxy fight since Bob Iger returned as Disney CEO in November 2022. Peltz, a known Iger critic and co-founder of hedge fund Trian Fund Management, acquired roughly $900M worth of Disney stock in late 2022.
He then used his influence to release a statement on January 11, 2023, saying that Disney had “lost its way”, which, according to him, resulted “in a rapid deterioration in its financial performance from a consistent dividend-paying, high free cash flow generative business into a highly leveraged enterprise with reduced earnings power and weak free cash flow conversion.”
In the statement, Trian nominated Peltz to be elected to the Disney board.
Disney reacted swiftly. They had until their annual shareholder meeting to fend him off, which they strategically dated for April. They publicly blasted Peltz and also revealed that Perlmutter himself was backing the investor’s proxy fight. The two are close and often dine together with their wives.
Iger announced a series of measures to try to address Peltz’s concerns, in an attempt for the board to not go along with his demands.
He pledged cuts worth $5.5 billion in costs, including $3 billion worth of cuts in content spending. Disney would also be reorganized into three divisions: Disney Entertainment (TV and film, including Disney Plus), ESPN, and Parks, Experiences, and Products. Finally, he also announced 7,000 layoffs.
Ike Perlmutter and Nelson Peltz Are Coming For Marvel and Disney
A strategic leak to The Wall Street Journal in early October 2023 revealed that Nelson Peltz was once again acquiring billions of dollars worth of Disney stock and was planning to ask Disney for multiple board seats. At the time, he had amassed $2.5 billion in shares.
The Journal reported in late October that Ike Perlmutter was once again the owner of the majority of Peltz’s shares, which are now North of four times what they had earlier this year.
However, the report said, Peltz had sole voting power over those shares, and he was not planning on asking for a board seat for Perlmutter, nor for him to be rehired by the company.
So what is Perlmutter planning exactly? That is one of the lingering questions that remains unanswered. He told the Journal that he can “no longer watch the business underachieve its great potential”, but is that it, or is he planning a huge revenge plot to strip Iger of his CEO title?
Perlmutter was the CEO of Marvel Studios since its inception and oversaw the building of the MCU since the very beginning, as well as the sell to Disney and the first two Avengers movies.
During the first few years of the MCU, Perlmutter had assembled the Marvel Creative Committee, which is now viewed as a bottleneck that stopped many projects from happening and removed plenty of ideas and creative liberties from others that were made.
In 2015, Perlmutter, after a series of creative fights with Kevin Feige, was about to fire him. Bob Iger then stepped in and pushed Perlmutter aside instead, promoting Feige to CEO and relegating Perlmutter to chairman of Marvel Entertainment, which oversaw the consumer products line.
The Marvel Creative Committee was subsequently dismantled, right before the wonder years of Marvel Studios began, with titles like Thor: Ragnarok, Black Panther, Captain Marvel, and the last two Avengers movies.
Iger faces a lot of challenges in the second year of his second tenure. He got a vote of confidence from the board earlier this summer when he got his contract renewed through 2026, but Bob Chapek already proved such a commitment doesn’t mean much if there are no quarter-to-quarter results to back it up.
Iger has now to respond to an extremely weak year at the box office, a six-month strike, and the plateaued streaming business. Although they did confirm 10 million new Disney Plus subscribers.
The next frontier for them is advertising. They also announced that half of their new subscribers in the US chose the ad tier, which is ultimately more profitable for them.
Despite all of that, though, Iger’s main job is to choose a successor. Earlier this week, it was announced he appointed Pepsi Co.’s chief financial officer, Hugh Johnston, as the studio’s new CFO, after Christine McCarthy stepped down earlier this year. Is that another attempted move to find a worthy person to hold the CEO office once he definitively leaves?
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Source: New York Post