Disney faces proxy fight from activist investor Nelson Peltz

Activist investor Nelson Peltz wants a seat on Walt Disney's board, saying he wants to "restore the magic" in the entertainment and media company.

Peltz's Trian Group filed a preliminary proxy statement on Thursday with the Securities and Exchange Commission seeking the position after announcing their intentions Wednesday.

Peltz said in the Trian press release that Disney has lost its way in recent years, "resulting in a rapid deterioration in its financial performance from a consistent dividend-paying, high free cash flow generative business into a highly leveraged enterprise with reduced earnings power and weak free cash flow conversion."

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In a presentation accompanying the securities filing, Trian noted Disney's total shareholder return has "materially underperformed" the S&P 500 and proxy peers over one-, three-, five- and 10-year periods.

"We believe that current investor sentiment on Disney is low, reflecting the hard truth that Disney is a company in crisis and faces many challenges that weigh on the Company’s investment prospects," the presentation said.

Disney shares are down more than a third over a one-year period. The S&P 500 is lower by half, just over 15%.

Ticker	Security	Last	Change	Change %
DIS	THE WALT DISNEY CO.	115.07	+5.94	+5.44%

"As a highly engaged shareholder serving on Disney’s Board, my goal would be to work collaboratively with Bob Iger and other directors to take decisive action that will result in improved operations and financial performance, enhanced shareholder value and a robust succession planning process that will set the stage for sustainable growth over the long term," he added. 

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Disney’s reply

On Wednesday, Disney announced Mark Parker, a company board member for seven years and the executive chair of Nike, would become the new chairman of the board. 

In the announcement, former board leader Susan E. Arnold said, "During his four decades at Nike, Mark has led one of the world’s most recognized consumer brands through various market evolutions and a successful CEO transition."

"He is uniquely positioned to chair the Disney Board during this period of transformation," she added. 

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The Trian and Disney connection 

Currently, Trian owns roughly 9.4 million common shares of Disney, a company valued at approximately $900 million.

Despite Disney’s significant advantages, recent share price and operating performance have been disappointing, Trian stated in their Jan. 11 release.

Shares for the entertainment giant are currently trading near an eight-year low, despite the company’s recent decision to re-hire Bob Iger as CEO, Trian stated. 

The investor noted adjusted earnings per share dropped 50% since fiscal year 2018.

The tussle with Disney could be Peltz's biggest proxy battle since an acrimonious fight to bag a seat on the board of Tide detergent-maker P&G. During his more than three-year tenure on P&G's board, the firm's stock price rose nearly 80%.

Disney has also faced pressure from Third Point's Daniel Loeb to spin off cable sports channel ESPN, refresh its board and buy Comcast's stake in Hulu, which has around 46 million subscribers.

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Walt Disney did not respond immediately to FOX Business inquiries. 

Reuters contributed to this report.