The same day activist investor Nelson Peltz announced he was launching a proxy campaign to get seats on Disney’s board of directors, the company adopted amended bylaws covering nominations of directors by outside parties.
Meanwhile, in a bid to win shareholder favor amid the brewing proxy battle, Disney separately Thursday announced a cash dividend of $0.30 per share, payable Jan. 10, 2024, to shareholders of record at the close of business on Dec. 11, 2023. It’s the company’s first dividend payments to investors in more than three years, after Disney suspended them during the COVID pandemic.
On Nov. 30, Disney’s board “amended and restated” the company’s bylaws, which became effective as of Thursday, the company said in an SEC filing Thursday.
Among other things, the amendments “enhance the procedural mechanics and disclosure requirements relating to business proposals submitted and director nominations made by stockholders,” Disney said in the filing. That includes requiring “certain additional background information, disclosures and representations regarding any proposing stockholders, any proposed director nominees and business and any other persons related to a stockholder’s solicitation of proxies” and that “any notice of director nomination be accompanied by all written questionnaires required of the company’s directors completed and signed by any proposed director nominees.”
In addition, Disney’s revised bylaws “address recently adopted amendments to Rule 14a-19 under the Securities Exchange Act of 1934, as amended, by requiring that any person soliciting proxies in support of a director nominee other than the board’s nominees provide a representation that such person will comply with Rule 14a-19 and deliver reasonable evidence to the company that the Rule 14a-19 requirements have been met,” Disney said.
The SEC’s Rule 14a-19, which went into effect for shareholder meetings involving contested director elections held after Aug. 31, 2022, establish new notice and filing requirements for all soliciting parties, as well as formatting and presentation requirements for universal proxy cards. In addition, the rules require shareholders presenting their own director candidates in the contest to solicit holders of a minimum of 67% of the voting power of shares entitled to vote in the election.
Disney’s new bylaws also require that “any person directly or indirectly soliciting proxies using its own proxy card use a proxy card color other than white.”
The announced intention by Peltz’s Trian Fund Management to launch a proxy fight to get its directors on the board comes a day after Disney named Morgan Stanley CEO James Gorman and former Sky chief Jeremy Darroch as new directors, with terms starting in early 2024.
Peltz’s Trian, which controls about $3 billion in Disney stock, issued a statement Thursday that after the Disney board rejected Trian’s request for board seats, including one for Peltz, the hedge fund will “take our case for change directly to shareholders.”
In response, Disney noted that 78% of the shares claimed to be beneficially owned by Trian are owned by former Marvel Entertainment chairman Ike Perlmutter. Disney said Perlmutter “was terminated from his employment by Disney earlier this year and has voiced his longstanding personal agenda against Disney’s CEO, Robert A. Iger, which may be different than that of all other shareholders.” Perlmutter did not immediately have any comment, his rep said.
On Thursday, investment management company Blackwells Capital, a Disney shareholder since 2018, weighed in on the drama by issuing a statement of support for Iger’s leadership of the company and the board appointments of Gorman and Darroch. “Displacing these individuals or other members of the board with Mr. Peltz and other Trian-selected nominees would deprive shareholders of valuable, experienced voices in the boardroom at a critical time in the company’s history,” Blackwells said. “Blackwells is concerned that Trian’s campaign prioritizes Mr. Peltz’s ego over what is best for all Disney shareholders, and that its latest effort may cost Disney shareholders upwards of $50 million and serve only as a value destructive fog for Disney’s leadership and board.”
Blackwells chief investment officer Jason Aintabi said in a statement, “Mindless, drum-beating activism is not the right strategy for shareholders. Disney’s board is acting in the best interests of all shareholders and should be allowed the time to focus on driving value at one of America’s most iconic companies without this fatuous sideshow.”
Regarding the reinstatement of the dividend, Disney chairman Mark Parker said in a statement, “This has been a year of important progress for The Walt Disney Company, defined by a strategic restructuring and a renewed focus on long-term growth. As Disney moves forward with its key strategic objectives, we are pleased to declare a dividend for our shareholders while we continue to invest in the company’s future and prioritize meaningful value creation.”
