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Peltz’s renewed fight for Disney board seats keeps pressure on CEO Iger to right the ship
Activist investor Nelson Peltz’s renewed fight for Disney (DIS) board seats is a positive for shareholders because he will push for a level of financial discipline that the company has lacked. Peltz’s Trian Partners, a major Disney shareholder, said Thursday it will launch a new challenge to get board representation. “Trian intends to take our case for change directly to shareholders,” the statement said. Jim Cramer first reported the news Thursday morning. As part of its release, Trian said the investment firm’s Disney stake is currently worth roughly $3 billion. Disney also put out a statement Thursday, saying Trian’s intended proxy fight stems from a grudge that Peltz ally Ike Perlmutter has against the media and theme park giant. The release said this “dynamic is relevant” in evaluating Peltz’s board nominees because the former Marvel boss Perlmutter was fired from Disney earlier this year. On Wednesday, Disney appointed two new members to its board, including the outgoing Morgan Stanley CEO James Gorman and Sir Jeremy Darroch, a long-time media veteran and former executive of British media company, Sky Group. We believe Gorman is a great addition because he’s been a great leader who has successfully transformed Morgan Stanley (MS), which like Disney is a Club portfolio holding. Trian said the Gorman and Darroch “represent an improvement from the status quo” but would not, in its view, “restore investor confidence or address the root cause behind the significant value destruction and missteps that this Board has overseen.” DIS YTD mountain Disney YTD Peltz will “keep the heat on Disney and this is a positive for us as shareholders,” Jim said Thursday while urging new Club members to “buy Disney right here, right now.” Earlier this year, Peltz launched a brief proxy battle to get on Disney’s board. But the activist investor ended it in a live CNBC interview with Jim — shortly after Iger unveiled in February his cost-cutting plan, which included thousands of layoffs. Peltz told Jim at the time, “Disney plans to do everything we wanted them to do,” referring to Iger’s first major action since he returned as CEO last November. However, roughly a year back on the job, Iger’s turnaround plan has not produced results fast enough for Peltz — or the Club. To be sure, Disney does appear to be getting on the right track with cost cuts and improving its free cash flow. Alongside the company’s latest quarterly earnings , management noted progress in revamping its expense structure. Iger added $2 billion in targeted savings, bringing his new cost-reduction plan goals to $7.5 billion. The CEO also said he would like to see the board reinstate the company’s dividend, which was suspended during the Covid pandemic. Still, these restructuring efforts take time, and we’re still waiting to see material changes come through via the stock price. We’re also waiting for profitability to come in for Disney’s streaming business. (Jim Cramer’s Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Nelson Peltz, founder and chief executive officer of Trian Fund Management, during the Future Investment Initiative (FII) Institute Priority Summit in Miami, Florida, US, on Thursday, March 30, 2023.
Marco Bello | Bloomberg | Getty Images
Activist investor Nelson Peltz’s renewed fight for Disney (DIS) board seats is a positive for shareholders because he will push for a level of financial discipline that the company has lacked.
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