Despite the success of Disney stock under CEO Bob Iger’s leadership, activist investor Trian Fund Management is aiming to win two board seats in a proxy vote at an upcoming meeting in an attempt to disrupt Iger’s turnaround plan. However, as of April 1, Disney had reportedly won the support of more than half of all shares voted, indicating that Trian’s efforts to gain board seats may be unsuccessful. This outcome would likely be best for Disney shareholders, especially given the company’s expectations-beating first quarter 2024 earnings report.
Shareholders are currently voting on three options for Disney’s board composition, with Trian proposing to replace two members while another option would add three new members to the board. Trian has been critical of Disney’s financial performance and stock underperformance, accusing the company of losing its way and not looking out for shareholders. Despite Trian’s claims that it has delivered strong returns for other companies it has invested in, governance experts are divided on whether Trian’s proposed board members would be beneficial for Disney investors.
Disney’s first quarter 2024 earnings report exceeded expectations, with adjusted earnings per share coming in 33 cents above estimates. The company also announced plans to cut costs and increase its dividend, as well as strategic initiatives such as a partnership with Epic Games and the launch of an ESPN streaming service in 2025. Analysts believe that these results will satisfy shareholders and attract support from activist investors despite ongoing challenges in Disney’s Parks business and linear television decline.
The outcome of the proxy vote remains uncertain, with more than half of the votes cast in favor of Disney as of the latest report. Large institutional shareholders such as BlackRock and T. Rowe Price have supported Iger, but the outcome could change as votes are counted. While individual investors hold a significant portion of Disney shares, large institutional shareholders will likely play a key role in determining the outcome. As of now, Trian faces challenges in gaining support, as Norges Bank Investment Management recently voted in favor of Disney’s slate of directors.
If Trian were to prevail, Iger may face distractions in dealing with the activist investors, potentially impacting Disney’s ability to continue producing strong financial results. Wall Street analysts are moderately bullish on Disney stock, with an average 12-month price target of $125.08, indicating slight upside potential. Overall, the outcome of the proxy vote will have significant implications for Disney shareholders and the future direction of the company under Iger’s leadership.
