Disney ‘Has Lost Its Way,’ Says Mouse House Former CFO

Activist investor Nelson Peltz has officially launched his second bid for a seat on the board of The Walt Disney Company. 

Peltz’s Trian Fund Management, which owns $3 billion of common stock in Disney, nominated the 81-year-old investor and former Disney CFO Jay Rasulo to the board, the asset management firm announced Thursday.

“As Disney’s largest active shareholder, we can no longer sit idly by as the incumbent directors and their hand-picked replacements stand in the way of necessary change, and peers and competitors continue to outperform,” Peltz said. “In our view, Disney’s Board has failed to fulfill its essential responsibilities — overseeing the development of an effective strategy, planning for orderly succession, aligning executive pay with performance, and ensuring accountability for operational execution."

Disney has “woefully under-performed its peers and potential,” Trian said, with earnings per share in its most recent fiscal year more than 50% lower than its peak. The company blamed Mouse House CEO Bob Iger for some of Disney’s woes, noting that it has under-performed since Iger was first becamse chief executive in 2005 and that its “shareholders were once over $200 billion wealthier than they are now.”

“The root cause of Disney’s underperformance, in our view, is a Board that is too closely connected to a long-tenured CEO and too disconnected from shareholders’ interest,” Trian said.

Iger, who returned to Disney’s helm as CEO in November 2022, has faced growing challenges since he began his second turn in the hot seat, including striking writers and actors, sinking shares, a public face-off with Spectrum parent Charter Communications, the possible sales of several of its holdings and more than a few box-office flops.

Peltz first launched a campaign for a seat on Disney’s board in January, but Trian withdrew its nomination of Peltz after the entertainment giant announced that it would be making changes to its organizational and operating structures to cut costs and increase profitability. 

At the time, Trian said in a statement that the decision would allow Disney leadership to “focus on creating long-term shareholder value without the distraction of a proxy contest.”

In recent months, however, reports that Peltz would revive his attempts for a seat circulated as Disney’s weak performance continued. In the last two years, Disney’s shares fell almost 37%. 

“The Disney I know and love has lost its way,” Rasulo said. “As independent voices in the boardroom, Nelson and I are confident that the combination of my decades of experience at Disney, Nelson’s significant boardroom skills and history of driving positive strategic change, and our combined consumer brands expertise and financial acumen, will be additive to the Disney Board.”

Peltz has served on the board of a handful of major consumer-goods firms, including Procter & Gamble, Unilever, Mondelez International and Kraft Heinz.

Trian expects that the annual shareholder meeting will take place next spring.