Disney rebukes Ike-led board coup: “oblivious to the ongoing secular change in the media industry”

In an SEC proxy filing, Bob Iger’s Disney made its case to shareholders to vote for their preferred slate of board members…and not the activist slate proposed by upstart Nelson Peltz, and his backer, former Marvel head Ike Perlmutter.  

In the lengthy filing, Iger and Co. made their case for why they should continue running the Mouse House – indeed, the letter was written on the jaunty Mickey-adorned virtual letterhead that makes company correspondence so surreal. Among the many factoids dropped in the filing: Bob Iger’s compensation from Disney was $31.6 million last year, which is gross. Of that, $16.1 million was in stocks and options. As astounding as that number is, it pales beside the $65.6-million Iger made in 2018, when Disney stock was a bit more flush.

While Iger’s salary was the headline on most news stories, I know you’re here for the Ike tea so here it is. Disney’s lawyers love very verrrry detailed timelines in their filings, and this one reveals that in November a meeting was held where Peltz laid out his plans for saving Disney, which was followed by a phone call between Iger and Peltz. And neither was especially illuminating.

On November 19, 2023, Mr. Iger and Mr. Gutierrez met with Mr. Peltz and Brian Schorr of the Trian Group in New York City. …Mr. Iger asked Mr. Peltz what courses of action he would recommend to the Board to address his concerns. Mr. Peltz again offered no strategic insights or proposed courses of action to address his concerns, and instead responded that he was not there to put forth a plan, he was only there to get a Board seat. Mr. Iger and Mr. Gutierrez asked if Mr. Peltz would be interested in meeting with both the Board and Disney’s segment leaders the following week to provide insight into his thesis for Disney, but Mr. Peltz declined.

On November 21, 2023, Mr. Peltz and Mr. Iger spoke on the phone, and Mr. Peltz reiterated his criticisms while also demanding to know if Mr. Iger would endorse his appointment to the Board. Mr. Iger responded that Mr. Peltz’s request was a Board decision that would be discussed as a Board. Mr. Iger also again asked Mr. Peltz what advice or thesis he had for addressing the issues he perceived with the Company. Mr. Peltz offered no plans or proposal other than his addition to the Board. Mr. Iger inquired as to Mr. Perlmutter’s objective in his partnership with Mr. Peltz, noting the fraught history with Mr. Perlmutter whose employment Mr. Iger had terminated a few months earlier, having previously removed him from his executive position at Marvel in 2015. Mr. Peltz did not engage on these matters.

After all this back and forth, Disney’s Governance and Nominating Committee and then the Board, decided not to recommend the Peltz/Perlmutter groups, which also includes former Disney CFO Jay Rasulo. And the filing reports this in no uncertain terms.

In deciding not to recommend Mr. Peltz, the directors considered a number of factors, including that in a two year quest for a seat on the Disney Board, Mr. Peltz had not actually presented a single strategic idea for Disney; that his assessment of Disney seemed oblivious to the ongoing secular change in the media industry; that Mr. Peltz’s experience was primarily in commodity consumer packaged goods businesses and not the media or technology sector, that Mr. Peltz had no experience in a business that is primarily driven by creative talent and focused on delivering uniquely memorable customer experiences; and that Mr. Peltz’s partnership with Mr. Perlmutter, who owns the lion’s share of the equity claimed by the Trian Group, and the complexity of Mr. Perlmutter’s history with Disney and Mr. Iger and other senior executives, created significant concern regarding how that partnership would impact Mr. Peltz’s agenda as a director.

In deciding not to recommend Mr. Rasulo, the directors considered a number of factors, including that after leaving Disney eight years earlier, Mr. Rasulo had no further executive role at any public company; that the media business, the impact of technology and the competitive universe had radically changed during that eight year period rendering his perspective on Disney stale and not relevant to the challenges of today; that an outdated perspective on the business would be damaging to the ongoing strategic transformation underway; that Mr. Rasulo’s four years as a director and also lead independent director of iHeartMedia, Inc. had not produced strong returns there; and the Board’s belief that Mr. Rasulo’s close relationship with Mr. Perlmutter, coupled with Mr. Rasulo’s having been passed over in the 2015 COO process despite Mr. Perlmutter’s sponsorship of him as a CEO successor, would likely inhibit Mr. Rasulo’s ability to work constructively with Mr. Iger and other executives at the Company with whom Mr. Perlmutter had clashed.