Disney’s board of directors could be facing a proxy war from its shareholders. Investor and activist Nelson Peltz has led the charge from the outside, in the last few months, first to address the poor performance of the company, then to unseat new CEO Bob Iger, but eventually doubling back to focus on Disney’s self-inflicted injuries. Through the course of his attack, Peltz’s goal has been to earn his own chair on the Disney board. Now Peltz is attempting to rally a group of stockholders to challenge Iger’s plans for the company, while Iger is creating his own coalition of executives and investors to secure his position as CEO and inspire growth in the media giant.

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The situation on Disney’s board has a communal relationship with how Disney acts on a consumer level. Though most of us will never see the direct consequences of this spat between Bob Iger and Nelson Peltz, the economy at large and the performance of the company will have an effect on the board’s decision-making process, which will, in turn, affect what we see from Disney. This executive conflict will affect how Marvel deals with China, how we watch Disney+, and will eventually determine who leads Disney.

An Outline of the Argument

     The Walt Disney Company

Last November, Bob Chapek was unceremoniously ousted as the CEO of Disney. Chapek had, for a fair amount of time, presided over a steady decline in Disney’s growth and an extreme underperformance in its stock price. During his final year as CEO, the board actually extended his contract by three years, but then quickly turned around and staged somewhat of a coup before his extension was up.

Before that happened, Peltz had been drawing attention to the fact that Disney was underperforming. He began meeting with Chapek in private to discuss possible solutions; the primary one being adding himself to its board of directors. When Disney reported earnings that fell dramatically below market expectations, Peltz grabbed shares worth a $900 million stake in the company. Due to the size of the company, Peltz’s shares are still only worth about half of 1%. Still, this was the moment when Peltz made it publicly clear he was making an effort to steer Disney, whether he was on the board or not.

Soon after, Chapek was fired, and Bob Iger returned as CEO. Iger had previously filled this position from 2005 to 2020 and presided over one of the most exceptional periods of growth in the company’s history. As such, he has a strong reputation as one of the best executives in the business. The market reflected its confidence when Disney’s stock price jumped nearly 6% after his return was made public.

But Peltz maintained his position. He and his investment firm Trian Partners, instead of trying to oust Iger, are simply trying to change Disney’s direction by offering a different perspective. This perspective took the form of restorethemagic.com, a website created to organize numerous presentations which detail an argument against Disney’s direction. Instead of offering Peltz a seat on the board, Disney fired back, making a statement.

“Despite months of engagement, Mr. Peltz had not, and the Trian Group representatives at the meeting had not, actually presented a single strategic idea for Disney, that their assessment of Disney seemed oblivious to the secular change that had been ongoing in the media industry, as well as the impact of the pandemic on each part of the Company’s business from production, to exhibition, to leisure travel.”

The argument has escalated, placing Peltz and his allies in direct opposition to Iger, who is already taking steps to remedy the issues Peltz has so loudly made light of. As Disney’s annual meeting of shareholders fast approaches in March, both parties are reinforcing their positions as Iger tries to fix Disney.

How Does This Affect Audiences?

     Disney Plus  Disney

Even if you don’t own stock in Disney, you still might be a fan of Avatar or have a Disney+ subscription. These types of conflicts are exactly what shake up markets and result in changes for the consumer. For example, one of Peltz’s big arguing points comes from the money Disney spent acquiring Fox. That, and much of the chaos caused by the pandemic, cut heavily into the company’s dividends, eliminating them entirely. Peltz says that this is a result of poor management. Iger says this is an unavoidable consequence of the pandemic. Either way, Iger may choose to restore dividends instead of investing in things like streaming so that he can maintain confidence among shareholders. This might result in ad-supported tier subscriptions for Disney+ in order to cover losses.

If the shareholders remain displeased with Disney’s performance in March, Peltz might organize a vote of no-confidence against Iger. This would change how the company is governed and put a stop to Iger, who is currently grooming a successor for the end of his two-year contract. This could change how Disney handles China lifting the ban on Marvel movies. Or the potential CEO might change how the Avatar franchise is released. Whatever the future holds, the echoes of this argument are sure to reach our ears.