Disney Elects Mark Parker Board Chairman, Replacing Susan Arnold; Faces Proxy Fight As Activist Investor Nelson Peltz Seeks A Seat

Jill Goldsmith
·7 min read
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Walt Disney has named a new chairman of the board, and indicated it’s also in for a proxy fight as Nelson Peltz’ Trian Group seeks a director’s seat for the activist investor in opposition to the company’s slate.

“The Board does not endorse the Trian Group nominee, and recommends that shareholders not support its nominee, and instead vote FOR all the Company’s nominees,” Disney said.

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Disney’s said its board has elected Mark Parker chairman, effective following the annual meeting of shareholders. A Disney director for the past seven-years and Executive Chairman of Nike as well, he will succeed Susan E. Arnold, who will not stand for re-election — as per the 15-year term limit under Disney’s Board Tenure Policy. As a result, the board will be reduced to 11 members.

Disney has a September fiscal year and usually issues its proxy statement — which, among other things, lists the company’s slate of directors up for election — in January, and holds its shareholder meeting in March. Investors are allowed delcare opposition board candidates to push change, leading to a what’s called a proxy fight. They are also able to put foward shareholder proposals. Among measures to be voted on, Trianon also wants Disney to amend its bylayws.

It’s been a tumultuous period for the company culminating in an abrupt CEO change in November as Bob Iger returned, taking the reins from Bob Chapek. Disney said it “remains open to constructive engagement and ideas that help drive shareholder value,” including with Trian. It cited Iger’s track record in growing shareholder value as CEO and noted that the exec “has already taken decisive steps to realign content creation and distribution, and reposition Disney’s streaming platforms and linear broadcast and cable networks for enhanced profitability for the company.”

Iger has a two year contract. Since succession planning went awry last time, one thing Trian wants to make sure of is that Disney plans this next round well, according to the WSJ. Disney noted that Parker will chair a newly created succession planning committee, look at internal and external candidates.

The WSJ said Trian execs met with Disney brass, including Iger and CFO Christine McCarthy, Tuesday in an attempt to come to an agreement and avoid a proxy battle, and that Arnold called Peltz this morning to offer him a role as a board observer and ask him to sign a standstill agreement, which he declined.

Another activist investor, Dan Loeb, agitated last year for Disney to spin off or sell ESPN but backed off in September saying he had a better understanding of the asset’s value to the broader company.

In a note published today, called ‘Restore The Magic,’ Trian said Disney is at a crossroads. “It can decide to fight the addition of 1 qualified Board member, OR work together with Trian to create sustainable, long-term value at Disney.”

“We believe that current investor sentiment on Disney is low, reflecting the hard truth that Disney is a company in crisis and faces many challenges that weigh on the Company’s investment prospects.”

“While we acknowledge that Disney, like many media companies, is undergoing a challenging pivot to streaming, we believe that many of the Company’s current problems are self-inflicted and need to be addressed Trian believes that it is well positioned to facilitate positive change at Disney given our experience investing in and serving on the board of directors of blue-chip companies, and working collaboratively with management teams and boards to optimize corporate governance, strategy, operations and capital allocation.”

Disney’s statement:

“Mark Parker is an incredibly well-respected leader who over seven years as a Disney director has helped the Company effectively navigate through a time of unprecedented change,” Arnold said. “During his four decades at NIKE, Mark has led one of the world’s most recognized consumer brands through various market evolutions and a successful CEO transition, and he is uniquely positioned to chair the Disney Board during this period of transformation.”

“Mark Parker’s vision, incredible depth of experience and wise counsel have been invaluable to Disney, and I look forward to continuing working with him in his new role, along with our other directors, as we chart the future course for this amazing company,” said Robert A. Iger, Chief Executive Officer, The Walt Disney Company. “On behalf of my fellow Board members and the entire Disney management team, I also want to thank Susan for her superb leadership as Chairman and for her tireless work over the past 15 years as an exemplary steward of the Disney brand.”

Said Mr. Parker: “I am honored to have the opportunity to serve as Disney’s Chairman, and I look forward to working closely with Bob and his management team on a strategy of growth that balances investment with profitability, while preserving Disney’s core mission of creative excellence, to deliver shareholder value. At the same time, it is the top priority of mine and the Board’s to identify and prepare a successful CEO successor, and that process has already begun.”

Mr. Parker will also chair a newly created Succession Planning Committee of the Board, which will advise the Board on CEO succession planning, including review of internal and external candidates. Mr. Parker served as NIKE’s Chairman and CEO until 2020, when he became Executive Chairman.

The Walt Disney Company Board has continued to evolve to ensure it has the right combination of backgrounds, skill sets and perspectives to guide the Company into the future. Today, Disney’s directors bring experience across a relevant range of disciplines, including brand, marketing and retail, direct-to-consumer expertise, and technology and innovation.

The Board is nominating for re-election at the Company’s Annual Meeting incumbent directors Mary T. Barra, Safra A. Catz, Amy L. Chang, Francis A. deSouza, Carolyn Everson, Michael B.G. Froman, Robert A. Iger, Maria Elena Lagomasino, Calvin R. McDonald, Mark G. Parker and Derica W. Rice.

Board Responds to Trian Partners Nomination by Recommending Shareholders vote for all of the Company’s Nominees

Trian Partners L.P. and Trian Partners Parallel Fund I, L.P., wholly owned subsidiaries of Trian Fund Management, L.P., along with other entities affiliated with Nelson Peltz (collectively, the “Trian Group”), have nominated Nelson Peltz for election as director at the Annual Meeting in opposition to the nominees recommended by the Board, and brought a proposal to amend Disney’s Bylaws.

The Walt Disney Company remains open to constructive engagement and ideas that help drive shareholder value. While senior leadership of The Walt Disney Company and its Board of Directors have engaged with Mr. Peltz numerous times over the last few months, the Board does not endorse the Trian Group nominee, and recommends that shareholders not support its nominee, and instead vote FOR all the Company’s nominees (noted above).

The Walt Disney Company has had a long-term track record of financial and creative success, built on the ability to leverage its rich intellectual property and unparalleled storytelling across its many businesses, from theatrical, streaming and linear broadcast to parks and resorts, and one of the most resonant names in sports, ESPN.  Mr. Iger’s mandate is to use his two-year term and depth of experience in the industry to adapt the business model for the shifting media landscape, rebalancing investment with revenue opportunity while bringing a renewed focus on the creative talent that has made The Walt Disney Company the envy of the industry. Mr. Iger has already taken decisive steps to realign content creation and distribution, and reposition Disney’s streaming platforms and linear broadcast and cable networks for enhanced profitability for the Company.

Under Mr. Iger’s first tenure as CEO from September 2005 through February 2020, the Company’s total shareholder return was 554%, which exceeded the S&P 500 total shareholder return of 244%. The company’s market capitalization grew nearly fivefold during his tenure from $48 billion to over $230 billion.

The Board of The Walt Disney Company has been continually refreshed, with a focus on directors whose industry experience is additive to the company’s strategic priorities. The average tenure of the current Board is four years, with three directors serving fewer than two years, and in addition the Board is led by an independent chairman.

The Company expects to file preliminary materials with respect to the 2023 Annual Meeting of Stockholders shortly and looks forward to communicating with its stockholders once definitive proxy materials are available.  The date of the Annual Meeting has not yet been announced.

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