Trian Fund Management, L.P. has nominated two candidates, Nelson
Peltz and Jay Rasulo, for election to the Board of Directors of The
Walt Disney Company (NYSE: DIS). Trian opposes the reelection of
two of Disney’s incumbent directors, Michael B.G. Froman and Maria
Elena Lagomasino. Trian and Disney have been advocating for their
respective director candidates and soliciting votes from Disney
shareholders ahead of the Company’s 2024 Annual Meeting of
Shareholders, which will be held on April 3.
Trian issued the following statement regarding Disney’s recent
communications during this election campaign:
Trian is disappointed that Disney is
running a scorched-earth campaign that appears to be focused on
deflecting attention from the Board’s failures.
Trian loves The Walt Disney Company
and believes it has unparalleled assets and opportunities and every
reason to grow and prosper. That is why the Trian Group is one of
Disney’s largest shareholders, with a stake worth more than $3.5
billion.1 Trian’s only objective in this campaign is to help Disney
and all its shareholders, just as Trian has sought to do during its
20-year history at more than two dozen well-respected public
companies.
But instead of recognizing our good
faith and track record, Disney claims that we have a history of
“attacking”2 companies and have “infiltrated”3 boards and we are
seeking to create “maximum disruption.”4 More unscrupulous still is
Disney’s claim that our candidates (including Disney’s own former
CFO) are “oblivious”5 and that our ideas for improving the Company
are “dangerous”6 and “inane.”7
In our view, this charged and
disingenuous rhetoric seems calculated to distract shareholders
from Disney’s poor track record and sidestep accountability. So too
is Disney’s focus in this campaign on Bob Iger and Ike
Perlmutter.
This election contest is not about
Mr. Iger or Mr. Perlmutter. We do not oppose Mr. Iger’s reelection
nor his continued service as CEO. Mr. Perlmutter is not on the
ballot, is not seeking a Board seat and will not influence the
fiduciary responsibilities of our candidates. He owns more than
$2.5 billion of Disney stock;8 he, like all shareholders, wants
Disney to improve and create value. The relationship between Mr.
Iger and Mr. Perlmutter is irrelevant. Every drop of ink Disney
spills on these subjects appears to be an attempt by the Board to
avoid the topic at hand: the need for improved performance at
Disney and change in the boardroom.
The fact is that Disney has
significantly underperformed its potential, its peers and the
market during the tenures of incumbent directors Michael B.G.
Froman and Maria Elena Lagomasino, whom we seek to replace.9 During
each of their directorships (until Trian began pushing for change),
Disney’s stock was down more than 20%.10 During both of their
tenures, the Company’s earnings per share have declined.11 Disney
cannot and does not dispute this reality.
Instead, the Company’s Board has
concocted a distorted picture of performance, splicing together
stock returns from more than a decade before these directors were
on the Board with results over the most recent 17 months,
conveniently leaving out nearly three years in the middle.12 This
is akin to a football team claiming it actually won the game by
simply refusing to recognize all the points scored by the other
team in the third quarter.
Worse still, Disney is trying to
count “points” scored in the early 2000s, long before Mr. Froman
and Ms. Lagomasino were even on the Board. Moreover, Disney would
have shareholders compare the score against only its weakest
competitors – those with just legacy media businesses – rather than
against the group of peers that Disney has previously used to
justify paying executives hundreds of millions. In our view,
reporting the score this way is misleading.
Furthermore, Disney has manipulated
its analysis of Trian’s contributions to portfolio companies. For
the eleven Trian investments for which Mr. Peltz joined the board,
these companies subsequently delivered 17% average annualized
returns.13
Disney also appears to be leaning on
its investment bankers and commercial partners for public
endorsements,14 when this campaign should be focused not on
statements of highly compensated bankers and service providers, but
on how shareholders can ensure good governance and oversight from
the Board. Notably, neither J.P. Morgan, Disney’s lead “activism
defense” advisor, nor ValueAct, which has managed hundreds of
millions for Disney’s pension fund,15 have anything to say about
Mr. Froman, Ms. Lagomasino or Disney’s other non-management
directors. Parties to lucrative arrangements are typically happy to
say nice things about their client’s CEO. The fact is that
shareholders have been left in the dark about how many millions of
dollars the firms making these endorsements have and will be
paid.
Irrespective of the paid endorsers or
harsh rhetoric it uses, Disney cannot convince us, or, we suspect,
our fellow owners, that the Company is performing well. Disney
claims that the “correct” way to measure a company’s performance is
to look at the current stock price.16 So, we did, and the numbers
speak for themselves: Disney has been on a losing streak for many
years, underperforming its peers over one year, three years and
five years; since the announcement and closing of the Fox
acquisition; since the BAMTech acquisition, which Disney now claims
was a milestone in its transformation;17 and since the launch of
Disney+.18 Over what relevant period has this Board created value
for shareholders?
In our view, Disney was slow to adapt
to streaming, significantly overpaid for the Fox acquisition, has
lagging media margins, is spending tens of billions on the Parks
without a disclosed timeframe or plan, has announced term sheets to
drive excitement on deals that are still being negotiated and has
misaligned its executive compensation for more than a decade.
Change is needed.
Given Disney’s many competitive
advantages, Trian is convinced Disney can outperform for
shareholders in the future. To Restore the Magic at Disney, we
believe the Board needs focused and aligned directors who are
committed to helping to set ambitious goals and hold management
accountable.
We encourage our fellow Disney
shareholders to vote for Mr. Peltz and Mr. Rasulo, while
withholding support from Mr. Froman, Ms. Lagomasino and all three
Blackwells Nominees.
To ensure the election of Nelson Peltz and Jay Rasulo, it is
essential that shareholders vote “FOR” Nelson
Peltz and Jay Rasulo, and
“WITHHOLD” on Michael B.G. Froman, Maria
Elena Lagomasino, and all three Blackwells Nominees. For
more information, visit our website: www.RestoreTheMagic.com.
About Trian Fund Management, L.P.
Founded in 2005, Trian Fund Management, L.P. (“Trian”) is a
multi-billion dollar investment management firm. Trian is a highly
engaged shareowner that combines concentrated public equity
ownership with operational expertise. Leveraging the 40+ years’
operating experience of our Founding Partners, Nelson Peltz and
Peter May, Trian seeks to invest in high quality but undervalued
and underperforming public companies and to work collaboratively
with management teams and boards to help companies execute
operational and strategic initiatives designed to drive long-term
sustainable earnings growth for the benefit of all
stakeholders.
Media Contacts:
Anne A. Tarbell(212) 451-3030atarbell@trianpartners.com
Paul Caminiti / Pamela Greene / Jacqueline ZuhseReevemark(212)
433-4600Trian@reevemark.com
Investor Contacts:
Matthew Peltz(212) 451-3060mpeltz@trianpartners.com
Ryan Bunch(212) 451-3176rbunch@trianpartners.com
Bruce Goldfarb / Pat McHughOkapi Partners LLC(212) 297-0720(877)
629-6357info@okapipartners.com
Edward McCarthy / Richard Grubaugh / Thomas GerminarioD.F. King
& Co., Inc. (212) 229-2634 Disney@dfking.com
Disclaimer
Except as otherwise set forth in this press release, the views
expressed in this press release reflect the opinions of Trian Fund
Management, L.P. and its affiliates (“Trian”), and are based on
publicly available information with respect to The Walt Disney
Company (“Disney” or the “Company”). Trian recognizes that there
may be confidential information in the possession of the Company
that could lead it or others to disagree with Trian’s conclusions.
Trian reserves the right to change any of its opinions expressed
herein at any time as it deems appropriate and disclaims any
obligation to notify the market or any other party of any such
change, except as required by law. Trian disclaims any obligation
to update the information or opinions contained in this press
release, except as required by law. For the avoidance of doubt,
this press release is not affiliated with or endorsed by
Disney.
This press release is provided merely as information and is not
intended to be, nor should it be construed as, an offer to sell or
a solicitation of an offer to buy any security nor as a
recommendation to purchase or sell any security. Funds, investment
vehicles, and accounts managed by Trian currently beneficially own
shares of the Company. These funds, investment vehicles, and
accounts are in the business of trading – buying and selling –
securities and intend to continue trading in the securities of the
Company. You should assume such funds may from time to time sell
all or a portion of their holdings of the Company in open market
transactions or otherwise, buy additional shares (in open market or
privately negotiated transactions or otherwise), or trade in
options, puts, calls, swaps or other derivative instruments
relating to such shares.
Some of the materials in this press release contain
forward-looking statements. All statements contained herein that
are not clearly historical in nature or that necessarily depend on
future events are forward-looking, and the words “anticipate,”
“believe,” “expect,” “potential,” “could,” “opportunity,”
“estimate,” “plan,” “once again,” “achieve,” and similar
expressions are generally intended to identify forward-looking
statements. The projected results and statements contained herein
that are not historical facts are based on current expectations,
speak only as of the date of these materials and involve risks,
uncertainties and other factors that may cause actual results,
performances or achievements to be materially different from any
future results, performances or achievements expressed or implied
by such projected results and statements. Assumptions relating to
the foregoing involve judgments with respect to, among other
things, future economic competitive and market conditions and
future business decisions, all of which are difficult or impossible
to predict accurately and many of which are beyond the control of
Trian.
The estimates, projections and potential impact of the
opportunities identified by Trian herein are based on assumptions
that Trian believes to be reasonable as of the date of this press
release, but there can be no assurance or guarantee (i) that any of
the proposed actions set forth in this press release will be
completed, (ii) that the actual results or performance of the
Company will not differ, and such differences may be material, or
(iii) that any of the assumptions provided in this press release
are accurate.
Important Information
Trian Fund Management, L.P., together with Nelson Peltz, Peter
W. May, Josh Frank, Matthew Peltz, Isaac Perlmutter, James A.
Rasulo, Trian Fund Management GP, LLC, Trian Partners, L.P., Trian
Partners Parallel Fund I, L.P., Trian Partners Master Fund, L.P.,
Trian Partners Co-Investment Opportunities Fund, Ltd., Trian
Partners Fund (Sub)-G, L.P., Trian Partners Strategic Investment
Fund-N, L.P., Trian Partners Strategic Fund-G II, L.P., Trian
Partners Strategic Fund-K, L.P., The Laura & Isaac Perlmutter
Foundation Inc., Object Trading Corp., Isaac Perlmutter T.A., and
Zib Inc. (collectively, the “Participants”) filed a definitive
proxy statement and accompanying form of blue proxy card (as
supplemented and amended on February 12, 2024, the “Definitive
Proxy Statement”) with the Securities and Exchange Commission (the
“SEC”) on February 1, 2024 to be used in connection with the 2024
annual meeting of shareholders of the Company.
THE PARTICIPANTS STRONGLY ADVISE ALL SHAREHOLDERS OF THE COMPANY
TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER PROXY MATERIALS
BECAUSE THEY CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS
ARE AVAILABLE AT NO CHARGE ON THE SEC’S WEBSITE AT
HTTP://WWW.SEC.GOV AND TRIAN’S WEBSITE,
HTTPS://RESTORETHEMAGIC.COM. THE DEFINITIVE PROXY STATEMENT AND
ACCOMPANYING PROXY CARD WILL BE FURNISHED TO SOME OR ALL OF THE
COMPANY’S SHAREHOLDERS. SHAREHOLDERS MAY ALSO DIRECT A REQUEST TO
EITHER OF TRIAN’S PROXY SOLICITORS, OKAPI PARTNERS LLC, 1212 AVENUE
OF THE AMERICAS, NEW YORK, NY 10036 (SHAREHOLDERS CAN E-MAIL
INFO@OKAPIPARTNERS.COM OR CALL TOLL-FREE: (877) 629-6357), OR D.F.
KING & CO., INC., 48 WALL STREET, NEW YORK, NY 10005
(SHAREHOLDERS CAN E-MAIL DISNEY@DFKING.COM OR CALL TOLL-FREE: (800)
207-3158).
Information about the Participants and a description of their
direct or indirect interests by security holdings or otherwise can
be found in the Definitive Proxy Statement.
1 Please refer to the definitive proxy statement, filed with the
United States Securities and Exchange Commission (the “SEC”) by
Trian Fund Management L.P. and certain of its affiliates and other
persons (the “Definitive Proxy Statement”)) for information
regarding the members of the “Trian Group.” Nelson Peltz
beneficially owns Disney shares worth approximately $3.5 billion
and Jay Rasulo owns Disney shares worth approximately $775,000, in
each case as further detailed in the Definitive Proxy Statement.
Note that ownership position values are based on Disney’s share
price at the close of business on March 12, 2024.2 Disney video
filed with the SEC on March 11, 2024 (the “Disruptive Video”).3
Id.4 Disney presentation filed with the SEC on March 11, 2024 (the
“March 11 Presentation”) at page 35.5 Id. at page 42.6 Id. at page
44.7 Id. at page 4.8 Ike Perlmutter beneficially owns 25,569,059
Disney shares worth more than $2.5 billion, as further detailed in
the Definitive Proxy Statement. Market value based on Disney’s
share price at close of business on March 12, 2024.9 FactSet. Note:
Disney performance measures TSR through 10/06/23 defined as the
total return an investor would have received if they purchased one
share of stock on the first day of the measured period, inclusive
of share price appreciation and dividends paid. 10/06/23 represents
the trading day prior to the WSJ article titled “Nelson Peltz
Boosts Disney Stake, Seeks Board Seats” by Lauren Thomas and Robbie
Whelan reporting on Trian’s increased beneficial ownership in
Disney shares and expected request for Board representation;
“Peers” represents the simple average of “Media Industry Peers” as
defined in Disney’s 2024 Definitive Proxy Statement and consists of
Alphabet, Amazon, Apple, Comcast, Meta, Netflix, Paramount, and
Warner Bros. Discovery; “Market” represents the S&P 500 which
we highlight here only as a widely recognized index, however, for
various reasons the performance of the index and that of the
securities mentioned above may not be comparable. One cannot invest
directly in an index.10 Id.11 Based on Disney’s GAAP earnings per
share for the last twelve months ended December 1, 2015 and
September 7, 2018, when the tenures of Ms. Lagomasino and Mr.
Froman, respectively, began – $4.90 and $7.95, respectively –
compared to Disney’s FY2023 GAAP earnings per share of $1.29.12 The
March 11 Presentation at page 51.13 Trian presentation filed with
the SEC on March 4, 2024 (the “Trian White Paper”) at page 88.14
See, for example, Disney solicitation materials filed with the SEC
on March 12, 2024; March 11, 2024; March 4, 2024; and February 27,
2024, all of which reference ValueAct Capital Management. See also,
JPMorgan Chase CEO Jamie Dimon’s statement on March 12, 2024.15
Schedule C to Form 5500 of The Walt Disney Company Retirement Plan
Master Trust for fiscal years 2013 through 2022.16 Disney
presentation filed with the SEC on March 13, 2024 (the “March 13
Presentation”) at page 6.17 The March 11 Presentation at page 14.18
FactSet. Note: Disney relative performance measures TSR through
03/12/24 defined as the total return an investor would have
received if they purchased one share of stock on the first day of
the measured period, inclusive of share price appreciation and
dividends paid. “Peers” represents the simple average of “Media
Industry Peers” as defined in Disney’s 2024 Definitive Proxy
Statement and consists of Alphabet, Amazon, Apple, Comcast, Meta,
Netflix, Paramount, and Warner Bros. Discovery.
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