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Disney snubs Nelson Peltz, names Nike’s Mark Parker chairman

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Activist investor Nelson Peltz on Wednesday was gearing up for a proxy fight with Walt Disney after the entertainment giant snubbed his bid for a board seat.

It’s the second time in six months that an activist shareholder has mounted pressure on Disney. Last yr, billionaire Daniel Loeb pushed for changes.  In November, the corporate brought back old boss Bob Iger as chief executive.

On Wednesday, Disney also named independent director and Nike Executive Chairman Mark Parker as its next chairman, replacing Susan Arnold, who won’t stand for re-election. Parker can even chair a newly created succession planning committee that can advise the board on CEO succession planning.

Disney’s shares rose 1.4% in prolonged trading. Shares sank last yr as losses deepened in its streaming business, and the worth is now lower than half its 2021 high.

Peltz’s Trian Fund Management LP, which owns a lower than 5% stake in Disney, believes Iger shouldn’t be back accountable for the corporate, and pushed for operational changes and price cuts, a source acquainted with the matter told Reuters in November.

Nelson Peltz’s Trian Fund Management LP owns a lower than 5% stake in Disney.REUTERS

The fund bought a stake that month after Disney posted disappointing earnings, in line with a media report. Peltz had signaled interest in a board seat.

Trian believes Disney has excessive compensation practices and lacks cost discipline, the Wall Street Journal said Wednesday, citing people acquainted with the matter.

Trian can also be critical of management overpaying for the assets of twenty first Century Fox and bidding aggressively for pay-TV giant Sky PLC, WSJ said.

Peltz, who often presents himself as a partner with constructive advice for firms, fought a bitter proxy fight with Procter & Gamble just a few years ago and won a board seat. Last yr, Trian built up stake in UK’s Unilever and burger chain Wendy’s.

Investment by Trian has typically been positive for firms’ stocks.

“Trian believes that Disney’s recent performance reflects the hard truth that it’s an organization in crisis with many challenges weighing on investor sentiment,” the hedge fund said in a press release. Trian owns about 9.4 million Disney shares valued at $900 million.

“For shareholders, no matter whether or not Peltz wins his battle, his move seems to have made Disney’s management more aggressive in implementing improvements and effective tuning their strategy,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.

Bob IgerBob Iger, who got here back from retirement in November, has vowed to deal with cost cuts.Charles Sykes/Invision/AP

“I’m grabbing a box of popcorn to look at this show!” Schulman said.

Disney said Trian had nominated Peltz for a board seat in opposition to the corporate’s nominees.

Disney said that while its senior leadership and board “have engaged with Mr. Peltz quite a few times over the previous couple of months, the board doesn’t endorse the Trian Group nominee.”

Iger, who got here back from retirement in November, has vowed to deal with cost cuts and profitability after the fledgling Disney+ streaming operation became a world giant but lost a whole lot of money. Disney had said it expects the business to interrupt even by 2024.

Third Point’s Loeb had pushed Disney to spin off the ESPN sports television network and speed up the planned takeover of Hulu from minority-owner Comcast Corp CMCSA.O.

Loeb later tweeted that he higher understood ESPN’s value to Disney. Third Point also pushed Disney to refresh its board and reached a settlement in September that handed a seat to former Meta executive Carolyn Everson.

Meanwhile, Parker, when he was Nike’s CEO, instituted a management reshuffle in 2018 after learning of allegations that Nike executives would get “sloppy drunk” and prey on female subordinates, in line with an unsealed gender discrimination lawsuit against the sneaker giant.

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