Disney shareholders back CEO Iger, rebuff activists who wanted to shake up firm

04 April 2024 , 08:57

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Disney chief executive Bob Iger (Image: Invision)

Disney shareholders have shown their support for CEO Robert Iger, rejecting the efforts of activists who wanted to shake up the company.

This week, they voted against activist investor Nelson Peltz and his ally, former Disney Chief Financial Officer Jay Rasulo, who were trying to get seats on the company's board. The company had suggested a group of directors that didn't include Peltz or Rasulo.

These shareholders had previously said in a preliminary proxy filing that they wanted to ensure a "successful CEO transition" at Disney and link management pay with performance. Despite not winning the vote, they claimed a sort of victory, pointing out that since Peltz's company, Trian Partners, started pushing Disney in late 2023, the entertainment giant has been very active.

It's added new directors and announced new operating initiatives and plans to improve its theme parks. "Over the last six months, Disney's stock is up approximately 50% and is the Dow Jones Industrial Average's best performer year-to-date," Trian said in a statement. Shares in Walt Disney Co., which is based in Burbank, California, closed Wednesday down 3.1%.

The activist group had earlier said it wanted to see Disney achieve "Netflix-like" financial performance. They specifically mentioned a 2027 target for Disney to increase a profit margin measure called EBITDA - earnings before interest, taxes, depreciation and amortization - to levels of 15% to 20%.

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Disney is already performing at a high level. In the last three months of 2023, Disney's earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin was 18%, according to data from CapitalIQ. For the financial year that ended in September, Disney's EBITDA margin was 16.5%, based on the same data.

In November 2022, Disney announced that Bob Iger would return as CEO, replacing Bob Chapek. Chapek's two-year stint as CEO was marked by disagreements fi and weakening financial performance. Iger was the face of Disney for 15 years as CEO before he handed over the role to Chapek in 2020. During this time, Iger achieved many successes that were praised by the entertainment industry and Disney fans. However, his second stint in the role has not been as well received.

Lawrence Matheson