Disney board weathers high-stakes proxy battle at shareholders meeting

Disney board weathers high-stakes proxy battle

Wednesday was a battle for Disney's soul, with the Magic Kingdom under attack from two sides.

ORLANDO, Fla. - Wednesday was a battle for Disney's soul, with the Magic Kingdom under attack from two sides.

Activist investors Trian Group and Blackwells Capital aimed to get their members elected to Disney’s board of directors so they could have a more significant say in the company's leadership.

Disney expert Eric Morton from WDWNT.com said it had been an epic fight to win the hearts and minds of shareholders.

"We've been watching this for a while because it was pretty clear that people were wanting a board shakeup," he said.

The Trian Group is a hedge fund led by billionaire Nelson Peltz. Disney expert Seth Kubersky from TheUnofficialGuides.com said Peltz wanted to squeeze more value from the company's stock.

"Nelson Peltz's argument has been that Disney's stock value has fallen below the S&P 500 for quite some time now. He's the kind of investor who likes to break up companies and get as much profit as he can out of their pieces."

Peltz was also working with Disney’s former Chief Financial Officer, James Rasulo, to get seats on the board. Kubersky said all sides spent a lot of money trying to woo the shareholders to vote their way.

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"Between Blackwells and Trian, they've spent almost $30 million to try to unseat members of Disney's board, and Disney has spent $40 million in return, fighting back."

Trian and Blackwells argued Disney wasn't putting enough money into its streaming services, its movies were underperforming at the box office, and its theme parks weren't responding to the innovations at competing parks, like Universal Orlando.

"Hedge fund management companies like Trian are notorious for focusing on short-term gains at the expense of the company's long-term investments," Kubersky said.

It came to a head at Disney’s annual shareholder's meeting, where investors roundly rejected the hedge fund proposals and decided to stick with the current board and CEO, Bob Iger. Morton said this proxy battle may send a message to Disney’s board.

"Maybe it's good to have dissenting voices in the boardroom every now and then. I think a legitimate criticism of the Disney board is that they've been fairly unified, status quo, and not rocking each other's boats too much."

A big question was what would happen after Iger eventually stepped down as CEO. Morton and Kubersky agreed that current Disney Parks and Resorts Chair Josh D’Amaro was a strong contender for the job.