Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
An influential shareholder advisory group has recommended that Disney’s investors support Nelson Peltz’s pitch for a seat on its board of directors, breathing life into the billionaire activist’s struggling campaign ahead of the entertainment giant’s annual meeting next month.
In a report on Thursday, Institutional Shareholder Services said that Peltz “could be additive to the succession process” once Disney chief executive Bob Iger steps down. And Peltz could also provide “assurance to other investors that the board is properly engaged this time around”.
Peltz’s fund, Trian Partners, has nominated two board directors for Disney’s board at the company’s annual meeting on April 3: Peltz himself and Jay Rasulo who was previously Disney’s chief financial officer. ISS only recommended Disney shareholders support Peltz, not Rasulo.
“Though we do not have any concerns about his ability to serve as an objective director, we recognise that Rasulo’s potential presence might create added friction on the board,” ISS said. “Peltz, with his considerable experience on other boards and fiduciary duties owed to a large shareholding group, appears best positioned to bring a shareholder perspective to the board.”
ISS’s recommendations diverge from fellow proxy adviser Glass Lewis, which earlier this week backed all of Disney’s board nominees.
The ISS endorsement is a boost for Peltz’s campaign after a series of setbacks. Iger has rallied support for Disney’s board nominees and won the backing of JPMorgan Chase chief Jamie Dimon earlier this month.
This week, George Lucas, the creator of Star Wars and one of Disney’s largest individual shareholders, endorsed Iger and Disney’s board recommendations, stating his “full faith and confidence” in Iger’s “track record of driving long-term value”.
“Creating magic is not for amateurs”, Lucas said. Iger has also drawn endorsements from heirs of company founders Roy and Walt Disney in recent weeks.
Trian controls a stake in Disney worth about $3bn, a position which includes shares owned by Ike Perlmutter, a friend of Peltz and the former chair of Marvel, which was acquired by Disney in 2009.
In a statement, Disney reiterated its stance that Peltz “does not bring additive skills to the board, nor does he have a meaningful plan to deliver superior shareholder value”.
“We strongly believe that ISS reached the wrong conclusion in its recent report when it comes to adding Nelson Peltz to the board,” said Mark Parker, chair of Disney’s board.
Chris Rossbach, a fund manager at J Stern & Co, said it had voted in favour of Disney’s board recommendations. Stern had decided not to vote for the Trian proposals, he said, because “we think Disney’s shareholders are better served by continuous focus on the business than further disruption on the board”.
While the recommendations of proxy advisers such as ISS can be influential, big shareholders are often likely to make their own decisions on how to vote in contentious board fights such as Disney’s. Still, the recommendations can provide asset managers with cover to break with a company and support dissident board nominees.
Additional reporting by Anna Nicolaou
This post was originally published on Financial Times
