Can A Duck Save The Walt Disney Company From Activist Investors?

Animation is often used as an educational tool, and this week, the Walt Disney Company’s corporate minions raided the company’s cartoon vaults to put together a video — WATCH IT HERE — that teaches shareholders how to cast their ballots for its upcoming board of directors election.

The video features iconic characters and scenes from films such as Alice in Wonderland, Sleeping Beauty, and Hercules, while a narrator explains the Viennese lab-coated duck-professor Ludwig Von Drake the finer points of the upcoming vote. The corporate use of the characters is unsurprising, but stands in stark contrast to the company’s recently released short, Once Upon a Studio, which paid a touching tribute to the company’s creative legacy and the thousands of artists who contributed to it over the last century.

Why was this explainer video made? The video was produced to tell Walt Disney Company shareholders how they can vote in an upcoming board member election that could result in several current members losing their seats. The video also clearly tells the shareholders who its preferred choices are for the board. “Remember, it’s important you vote only for Disney’s 12 nominees…” the video states. “Voting this year is critical, no matter how many or how few shares you may own.”

Why is this vote happening? This election was called for by two large groups of Disney shareholders who are unhappy with the financial performance of the company and want to enhance shareholder value. Nelson Peltz’s Trian Fund Management and Jason Aintabi’s Blackwells Capital are hoping to leverage their shares to replace members of Disney’s board of directors and implement management changes. Despite both groups being unhappy with the state of the company, they are at odds regarding the changes they’d like to see made and have each put forward their own candidates for board seats.

What does Trian want? Trian lays out its case at RestoreTheMagic.com. For its part, Trian wants the company to implement a succession plan for CEO Bob Iger, who is under contract until 2026. Peltz wants Disney to reduce costs and avoid making further bad decisions such as, according to him, overpaying for the acquisition of 21st Century Fox. Peltz has also said he believes Disney+ should achieve Netflix-like profit margins of 15-20% by 2027 but that the company would need to make adjustments to hit that target. In the upcoming election, Peltz and former Disney executive Jay Rasulo are aiming to replace current board members Maria Elena Lagomasino and Michael Froman.

And Blackwells? Aintabi’s group is similarly worried about life after Iger and has suggested Disney is too large and too complex to be handled by whoever takes over for the CEO when he steps down. To that end, the group has suggested Disney could break up parts of its business, such as its real estate holdings, into separate entities. Blackwells founder Aintabi has also said that he’s concerned by the lack of media experience on Disney’s board and would like to replace three members of the Disney board with executives who have more entertainment industry experience. Blackwells is looking to take over three board seats, with Aintabi nominating former Warner Bros. and NBCUniversal executive Jessica Schell, Tribeca Film Festival co-founder Craig Hatkoff, and Taskrabbit founder Leah Solivan. According to the group, Blackwells’ nominees will be more accommodating to the current Disney board than Peltz and Froman would be if they were elected.

Who’s most likely to win? Right now, it looks like the current Disney board is probably the favorite. Peltz has a horrible track record in these kinds of votes – he’s participated in proxy votes at several companies over the years, and Blackwells is relatively new to the fight. It also seems possible that the two challengers could split votes, strengthening the current board’s position.

When will the vote happen? Disney shareholders must submit their ballots before 11:59 p.m. on April 2, 2024, but this week’s video released by the company urges voters to do so “as soon as possible.”