June 25, 2024

Walt Disney’s Grandkids Back CEO Bob Iger & Board in Proxy Battle

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The grandchildren of Walt Disney and his brother Roy O. Disney sent open letters to shareholders in support of CEO Bob Iger and current company's Board of Directors, in response to activist investors engaging in

The grandchildren of Walt Disney and his brother Roy O. Disney sent open letters to shareholders in support of CEO Bob Iger and current company’s Board of Directors, in response to activist investors engaging in proxy fights. This shares the letters, offers a quick(ish) summary of the ongoing battle for the board, and our thoughts about the family’s input.

This comes ahead of the Walt Disney Company’s 2024 Annual Meeting of Shareholders on April 3, 2024, and as all of the various parties prepare for battle, proxy style. For its part, Disney has sent a letter to shareholders pleading its case as to why the current board has the right strategy for success, explaining how they’ve made substantial progress against objectives to make the business more efficient and effective. The company has also launched the website VoteDisney.com, which details how to vote (and not vote) via a fun video by Ludwig von Drake.

Trian Group has its own website, RestoretheMagic.com, and represents the most viable challenge to Disney thanks to the higher profile of its campaign as well as the number of shares held by Peltz, Trian, and its allies. The fact that Disney has felt the need to fend off the challenge with its own website and leaning on the star power and expertise of Ludwig von Drake suggests the company is taking it seriously.

The most interesting part about Trian’s challenge is the push for former Disney Parks Chair Jay Rasulo to have a board seat. I don’t necessarily want that to happen, but it’s an intriguing idea. We already discussed a potential reappraisal of the much-reviled Rasulo, and perhaps that’s the wrong call. What we do want is more people with experience in Parks & Resorts (or who at least take the division seriously), especially if the company is actually going to spend $60 billion over the next decade to expand and enhance Walt Disney World and Disneyland.

Rasulo was there at the start of the last development boom for Walt Disney World, and saw firsthand how mutually beneficial it was for the company’s growth and guests. Otherwise, I’d agree that there isn’t much there there when it comes to the vision that Peltz has articulated for Disney’s future. At least it has kept Iger and co. on their toes, I guess, and pushed them to move expeditiously in fixing the problems that ail Disney.

That probably would’ve happened anyway, though. But Iger has moved with a sense of urgency and purpose in the last year and is making active efforts to right the ship after the disastrous Chapek regime and, to be fair, missteps at the end of the first Iger tenure.

Then there’s Blackwells Capital, which strikes me as the “you’re not serious people” portion of the proxy fight. I have a hard time believing Blackwells would even be doing anything at all–or at least, anything newsworthy–were they not riding on the coattails of the prolific Trian Group challenge.

For one thing, Blackwells only owns or controls about $15 million worth of Disney stock, which is probably a lot more than anyone reading this (even our biggest fan, Bob Chapek) but still pretty insignificant in the grand scheme of things. For reference, Trian owns or controls about $3 billion worth of shares, including Peltz and those owned by former Marvel chairman Ike Perlmutter.

For another thing, the proxy statement and ‘pitch’ being made by Blackwells is, frankly, nonsense. It talks about splitting Disney into 3 companies, wants theme parks to be treated like regular ole commercial real estate, and contains a bunch of gobbledygook about “Disney’s Physical, Spatial Computing, and AI-Driven Experiences.” To be entirely honest, the Blackwells campaign sounds as if it were written by ChatGPT, so I guess the push for more AI checks out there.

Anyway, that’s the backdrop against which this proxy battle is taking place, with new twists and turns and pleas to shareholders on a seemingly daily basis. The latest of these, as indicated above, are separate letters from the grandchildren of Walt Disney and Roy O. Disney.

Let’s start with the Walt grandchildren letter to shareholders:

“As the family of Walt Disney, we support The Walt Disney Company management and its Board of Directors, and oppose the nominations put forth by Nelson Peltz. The integrity in the name of Walt Disney has always been a priority to our family. Our mother — Diane Disney Miller, Walt’s eldest daughter — created The Walt Disney Family Museum to ensure that the history of her father’s life and those involved in the creation of his dreams would be honored and remembered. We still believe in this brand of integrity and storytelling.”

“Bob Iger has grown this company in a modern world, and he continues to maintain a balance of creativity and profit. It is still a company based on the desire to entertain and explore. There have been challenging times, but this current management has adjusted and grown through those challenges. We are never without gratitude and pride for our grandfather and being a part of this family, and we will always cherish the memories and the life that we had with him. With this gratitude, it matters to us what the company does and how Walt Disney is represented. As such, we support Bob Iger and The Walt Disney Company Board.”

The succinct letter by Walt Disney’s grandchildren ends be stating “we support Bob Iger and The Walt Disney Company Board.” It’s signed by Walter Elias Disney Miller, Tamara Diane Miller, Jennifer Miller-Goff, and Joanna Sharon Miller.

The grandchildren of Roy O. Disney addressed shareholders in a longer letter, sharing their background growing up as part of all things Disney and knowing that “From Mickey and Minnie, to Snow White and Mary Poppins, Disney is not a company that makes widgets – it makes magic. And it takes a special group of leaders with a deep respect and understanding for this tradition to develop the kinds of incredible experiences – whether in a theme park, at a movie theatre, or in your own home – that touch people’s hearts.”

Here’s the rest of the letter from the Roy grandchildren:

Bob Iger, his management team, and the Board of Directors are faithful to this magic. They understand that the longevity of The Walt Disney Company isn’t only the result of smart business decisions; it is rooted in the strong emotional connection Disney continues to forge with generations of people from around the globe.

We may not agree about everything, but we know that our grandfather would be especially proud of what Disney means to the world today. We also know that, like us, he would be very concerned by the threat posed by self-anointed “activist investors” who are really wolves in sheep’s clothing, just waiting to tear Disney apart if they can trick shareholders into opening the door for them.

What concerns us most about these hedge-fund-backed opportunists is that they have little to no knowledge of what Disney truly means to people like you. They haven’t made any arguments for why they should be entrusted with the keys to the kingdom our family built. To the contrary, their “I alone can fix it” mentality makes clear that they are not interested in preserving the Disney magic, but stripping it to the bone to make a quick profit for themselves.

We’re old enough to remember the bitter episode four decades ago when another corporate raider, Saul Steinberg — who, as it so happens, was good friends with one of the current activists, Nelson Peltz — launched a hostile takeover attempt of Disney and threatened to break apart the company. He was defeated, much as these activists must be defeated today.

This is not a company of interchangeable parts. It is home to thousands and thousands of dedicated employees who share the same passion Walt and Roy had for bringing hope and happiness to people through the magic of storytelling. Disney is lucky to be led by people who are looking to the future while drawing guidance from our cherished past. As The Walt Disney Company charts its path forward, it is imperative that the strategy Bob Iger, his management team, and the Board of Directors have implemented is not disrupted by those motivated by nothing more than their own self-interest.

Disney stories are filled with heroes and villains. We know who the villains are in this story, and we know they cannot be entrusted with protecting this company’s rich legacy or guiding its bright future.

Sincerely,
Roy P. Disney
Susan Disney Lord
Abigail E. Disney
Tim Disney

Most notably here is that Abigail Disney is one of the signatories, and she has been an outspoken critic of Bob Iger and the current direction of the Walt Disney Company. Regardless of what you think of her, I think it speaks volumes that she’s siding with Iger while referring to the activist investors as “wolves in sheep’s clothing” and “villains.”

Admittedly, I have not been as averse to the Trian challenge as many Disney fans. My view has long been that, even if unsuccessful, it provides a catalyst for change within the Walt Disney Company (such as more investment in Parks & Resorts) and addressing problems that long-plagued the Iger regime (such as succession planning). A meaningful check and balance, if you will. It’s the fight itself that has had value for Disney fans, not Trian (or Blackwells, I guess) obtaining seats on the board.

For many shareholders of the Walt Disney Company, especially readers of sites like this one, these letters are going to be the moment that they’ve seen enough. That’s precisely my view. After watching the family’s documentary, Christmas with Walt Disney, on Disney+ and making several visits to the Walt Disney Family Museum, I know how important his family was to Walt.

The fight has by now fulfilled its role, and the family has spoken. Even though none of these grandchildren have day-to-day involvement with the company, it does still bear their family name and they undoubtedly want what’s best for it and their grandfathers’ legacies. It’s over.

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YOUR THOUGHTS

What do you think of the letters to shareholders by the grandchildren of Roy O. and Walt Disney? Agree or disagree with them? What about the “Restore the Magic” Campaign or Jay Rasulo as a board candidate? Think the proxy fights stand a chance of succeeding after this? Do you agree or disagree with our assessment?

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