BURBANK, Calif. – The Walt Disney Company is facing renewed pressure from activist investor Nelson Peltz, as former Marvel Entertainment chairman Ike Perlmutter has handed over control of his near $2 billion Disney holdings to support Peltz’s bid for board seats, The Wall Street Journal reported Monday.
Perlmutter was terminated from Disney following his initial support of Peltz’s campaign earlier this year. However, Disney CEO Bob Iger asserted the firing was unrelated to Perlmutter’s Peltz endorsement.
Now, Perlmutter is backing Peltz financially by giving his investment firm, Trian Fund Management, authority over his 33 million Disney shares, sources told the Journal.
This stake represents Perlmutter’s entire Disney position, including shares with voting power. It quadruples the number of Disney shares controlled by Trian compared to Peltz’s first board nomination attempt, substantially strengthening his hand in negotiations.
Marvel Chairman Fired After Clashes With Disney Leadership
The influential Marvel chairman was reportedly dismissed due to long-running tensions with Disney leadership over cost-cutting measures and profit-focused strategy.
Perlmutter oversaw Marvel operations after Disney acquired the company in 2009 for around $4 billion. Under his stewardship, Marvel produced highly lucrative superhero films such as The Avengers.
However, Disney moved to scale back spending on Marvel projects in recent years to improve profit margins, the Journal noted. Perlmutter supported Peltz’s campaign for board seats earlier this year, claiming he was unable to voice concerns publicly while an employee.
In a statement Monday, Perlmutter called on Disney’s board to “immediately welcome one or more Trian board candidates” to lift the valuation of Disney shares. He expressed confidence Peltz could help Disney achieve its “great potential.”
Iger’s Second Stint as CEO Marked By Controversy
Bob Iger returned as Disney CEO in July after the board fired his hand-picked successor Bob Chapek following two years of lackluster performance. But Iger’s comeback has been dogged by issues like the Hollywood strikes and the aborted hiring of controversial CEO Bob Chapek.
Disney shares have plunged nearly 30% from 2022 highs of around $110 to current levels below $80. Peltz believes the stock is undervalued and that Disney needs a more shareholder-focused board, according to an earlier Journal report.
Activist investors like Peltz push for changes at companies they invest in to boost shareholder value. With Perlmutter’s support, Peltz has more leverage to potentially secure the board seats he desires.
Disney Pursues Cost Reductions As Challenges Mount
Disney is enacting cost cuts like layoffs and hiring freezes across its media networks and streaming platforms to improve profitability. However, the company faces ongoing headwinds like economic uncertainty and stiffer competition in streaming.
Its latest quarterly results fell short of expectations, weighed down by ballooning losses at its direct-to-consumer segment encompassing Disney+. The streaming service remains unprofitable despite reaching 164 million subscribers.
Disney could pursue more substantial changes like divesting assets or restructuring businesses to satisfy activist investors and shore up its stock price. But such measures may face opposition from Iger and the board.
The unfolding power struggle for Disney’s future direction pits the returning CEO against activists aiming to hasten a corporate shake-up. With Perlmutter now backing Peltz, pressure is mounting on Disney leadership to respond to calls for radical change.