Proxy advisory firm Glass Lewis backed the media giant Disney on Monday, when it recommended that shareholders cast their votes in favor of the company’s nominees amidst a heated struggle for board seats.
The endorsement comes just weeks before Disney’s annual shareholder meeting on April 3, where investors will vote for the for company’s board of directors.
In a report obtained by Deadline, the firm said that Disney “is undertaking what we consider to be a credible effort to shift key operational priorities under the leadership of one of the most well-respected CEOs in the industry.”
Disney chairman Mark Parker told Variety that the company is “pleased that Glass Lewis recognizes the strength of our highly qualified nominees and supports our plans to return this iconic company to a period of sustained growth and shareholder value creation.”
Disney’s proxy war
Nelson Peltz, co-founder of the asset management firm Trian Partners, is seeking to nominate himself and former Disney CFO Jay Rasulo to the company’s board. Trian Partners, which owns about $3.5 billion of Disney stock, released a 133-page paper this month outlining Peltz’s plans for the company, which include a restructuring of leadership, aligning performance-based compensation with shareholder value, and developing a strategy to reach margins similar to Netflix’s 15% to 20% by 2027.
“But despite its many advantages, Disney has lost its way. Disney fell from its #1 position at the box office, was late to enter the streaming business and doubled down on linear TV at the wrong time,” Trian said in a letter sent to Disney shareholders on Monday. “As a result, financial performance has deteriorated, with earnings per share, free cash flow, operating income and many other key metrics lower than they were five years ago.”
The investment firm Blackwells Capital has also nominated three candidates for the board.
Disney has launched a website asking shareholders to not vote for any of Trian or Blackwells board candidates.
Bob Iger’s other backers
Glass Lewis joins JPMorgan Chase CEO Jamie Dimon and nine Disney grandchildren in backing current Disney CEO Bob Iger in the proxy battle.
“Bob is a first-class executive and outstanding leader who I’ve known for decades. He knows the media and entertainment business cold and has the successful track record to prove it,” Dimon told CNBC last week.
“Putting people on a board unnecessarily can harm a company,” he added. “I don’t know why shareholders would take that risk, especially given the significant progress the company has made since Bob came back.”
Nine grandchildren of the media company’s co-founders, Walt and Roy Disney, also recently came out against Peltz’s plans.
“They are not interested in preserving the Disney magic, but stripping it to the bone to make a quick profit for themselves,” Roy P. Disney told The New York Times in late February.
In one of two letters to Disney shareholders, the Disney heirs wrote,“Bob Iger has grown this company in a modern world, and he continues to maintain a balance of creativity and profit.”