Disney Bruised In Board Vote Battle As Pension Fund CalPERS Backs Nelson Peltz & Ex-CFO

Around 100 hours before the deadline for all Disney shareholders to cast their ballots in the acrid board clash between the Mouse House and activist investor Nelson Peltz, one of the country’s top pension funds just rolled its cannons onto the battlefield.

With 6.7 million shares in Disney, the California Public Employees Retirement System (CalPERS) just blew a hole through Bob Iger and supporters’ hard fought efforts to keep the Ike Perlmutter-backed Peltz and a former CFO from gaining seats on the board on April 3.

“CalPERS believes Walt Disney Co. will benefit from fresh eyes on its board of directors and voted its company shares in favor of candidates Nelson Peltz and Jay Rasulo,” John Myers, chief of the CalPERS Office of Public Affairs, told Deadline today.

While CalPERS says it will also vote for Iger and the likes of ex-Morgan Stanley boss James Gorman for the 12-member board, they are certainly intent on shaking things up even as Disney shares have been rebounding in recent months.

“The pension fund’s established voting guidelines focus on the need for independent corporate boards, a say in setting executive pay, and increased transparency,” Myers added. “Two new directors who are qualified and capable of leading needed change in corporate governance will serve the Disney board well.”

Disney had no comment Saturday on CalPERS’ announcement.

Bob Iger, Nelson Peltz

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With 1.8 billion shares outstanding, Disney may not have a lot to fear from just CalPERS., who is one of the top 40 shareholders in the company.

However, behind closed doors in Burbank, it’s likely everyone is talking as this vote has now clearly become too close for Disney’s comfort. The fact is unlike many major companies, individual and small shareholders make up 40% of Disney’s owners, and perception is power at this point. To that end, in a usual state of affairs, a number of shareholders with just a couple of hundred shares or even less have reported to Deadline about receiving calls, campaign-like material and other outreach from both Disney and the Peltz founded Trian Partners

Just a couple of weeks ago, Perlmutter proxy Peltz looked DOA in his latest corporate salvo.

Iger and the incumbent board had lined up backing from big names like George Lucas, Laurene Powell Jobs, ex-CEO Michael Eisner (who was ousted for Iger in a 2005 board dust-up) and even past critics like Abigail Disney and other members of the family. Add to that coalition, influential voices such as JPMorgan Chase CEO Jamie Dimon, advisory firm Glass Lewis, ValueAct Capital, and New York City Retirement Systems (who have 2.6 million shares in Disney) have come out in support of  the 72-year old Iger and the present board.

Peltz got a big boost on March 21 when  influential proxy advisory board Institutional Shareholder Services recommended adding the activist investor to the Disney board, The seemingly uncertain succession planning for when past and current CEO Iger leaves for the second time (presently 2026 under a contract extended last year) played a major role in ISS siding with Peltz and recommending the jettisoning of current Disney  director Maria Elena Lagomasino.

“Dissident nominee Peltz, as a significant shareholder, could be additive to the succession process, providing assurance to other investors that the board is properly engaged this time around, ISS said, withholding its support from Rasulo. “He could also help evaluate future capital allocation decisions. Moreover, multi-year concerns surrounding Lagomasino’s role as a compensation committee member strengthen the case that Peltz’s addition, on balance, would appear a net positive.”

For historical context, ISS were a significant player in Eisner being shown the door almost 20 years ago, when they put their weight behind Iger for the top job.

Add to the mix, Blackwells Capital has also put forward three of its own board nominees, though the activist shareholder has proved no fan of Peltz and Trian. Still, this week, Blackwells instigated a lawsuit against Disney over what it views as an inappropriate corporate relationship with ValueAct. Blackwells alleges that ValueAct managed Disney pension funds from 2013-23, and that Disney never mentioned that when it got support from them in the board battle.

Disney has called the legal action “baseless,” but took it serious enough to issue a stinging response to the filing in Delaware Chancery Court.

“No Disney pension plan funds are currently invested with ValueAct nor were they managing any Disney pension plan funds at the time of their entering into an information-sharing agreement with the company,” the company said on March 28. “Prior to Blackwells filing this litigation, Disney offered to meet with them and provide documentation confirming those facts, but Blackwells declined the meeting.”

Even though a number of votes have already been cast, Disney shareholders have until 11:59 p.m. ET on April 2 to put forth their ballots. The results will be unveiled at the shareholder meeting on April 3, which will be conducted virtually and livestreamed on Disney’s investor relations website.

Either way you look at it, that’s some Disney plus.


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