Disney’s Stock Has Risen More Than 20% In 2024 With Proxy Fight Brewing; ValueAct Capital Reaffirms Support Of Bob Iger Ahead Of April 3 Shareholder Meeting

Dade Hayes
·3 min read
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After skidding to multi-year lows in late-2023, Disney stock has rebounded more than 20% thus far in 2024 as two activist investment firms have launched a proxy fight.

The stock finished Thursday trading at $110.18, up a fraction. It started the year at $90.10, putting its gains at 22% for the year to date. Longer-term, of course, the shares have slipped 15% over the past five years as the S&P 500 has nearly doubled, with that underperformance forming the centerpiece of activist shareholders’ recent attacks. Even at $110, Disney stock is well off its high three years ago near $190.

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Goosing the stock price is a stated goal of two activist investment firms that have taken aim at Disney’s top execs and board of directors ahead of the company’s annual shareholder meeting on April 3. It isn’t yet clear whether either opponent has managed to secure meaningful support from other shareholders, though many individuals hold Disney shares, making the sentiments of its base difficult to gauge compared with institution-controlled stocks. Whatever the outcome, the costly friction with the billionaire Nelson Peltz (who is allied with ex-Marvel chief Ike Perlmutter) has set the stage for perhaps the most consequential shareholder meeting since the 2004 edition, when former CEO Michael Eisner was stripped of his chairman title.

Peltz’s Trian Fund Management is asking shareholders to support the election of Peltz and ex-Disney CFO Jay Rasulo to the board of directors, over Disney’s objections. In a 130-page white paper and virtual town hall event for investors this week, Trian reiterated its complaints about what it sees as the company’s hidebound ways. The other activist, Blackwells Capital, has put forward three of its own board nominees, though it also has expressed criticism of Trian’s efforts.

A third firm, ValueAct Capital, has aligned itself with CEO Bob Iger and the company’s official slate of board nominees. The company issued its own white paper on Thursday, reiterating its support. “As legacy technologies transition to digital platforms, we believe Disney can lead the media industry forward,” ValueAct Co-CEO Mason Morfit wrote in the document. “We could not be more excited to partner with Bob and the board.”

Iger has won admiration even among some Street skeptics by shepherding cost-reduction initiatives and making dramatic moves to overhaul the company’s film business, ESPN and streaming while boosting investment in parks. Analyst Michael Nathanson of MoffettNathanson saluted Iger’s comments this week at a Morgan Stanley conference. The remarks served to reinforce “the encouraging direction in which the company seems to be moving,” Nathanson wrote in a note to clients Wednesday.

At the conference, Iger didn’t mince words, saying the company has “killed a few projects already that we just didn’t feel were strong enough” as it retools its film studio operation. The all-important parks division, meanwhile, is on track to post better-than-expected earnings despite tough comparisons with the prior fiscal year.

The investor event came on the heels of the company’s quarterly earnings report last month. In addition to solid financial results, Iger announced a host of initiatives, including the acquisition of Taylor Swift’s concert documentary for Disney+; the greenlighting of Moana 2 for this year’s holiday animation slot; and an investment in Fortnite maker Epic Games.

Asked about the proxy battle during a CNBC interview on earnings day and again at Morgan Stanley, Iger has labeled it a “distraction” and said he has not had contact with Peltz or other opposition forces. He said it is the activists’ intent to induce management to “take our eye off all [that’s] necessary to do what we need to do to generate returns for shareholders.”

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