Disney comes out victorious in proxy battle with Nelson Peltz

The highly anticipated resolution to the ongoing proxy battle between activist investor Nelson Peltz and the Walt Disney Company (DIS) has been reached. Shareholders have cast their votes, siding with Disney and allowing the company's incumbent board of directors members to retain their positions. The stock is trading lower on the news.

Yahoo Finance's Alexandra Canal breaks down the details, providing insights into what this will mean for the media company and its leadership moving forward.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

Editor's note: This article was written by Angel Smith

Video Transcript

JOSH LIPTON: Well, Julie, we've also got our eyes set on Disney as it emerges victorious now in its proxy battle with activist investor Nelson Peltz. Disney making that official announcement at its annual shareholder meeting. And we've got Yahoo Finance's very own Alexandra Canal here with the very latest. Ale.

ALEXANDRA CANAL: Hi, Josh. Yeah, and I want to take a look at that stock price. Because shares are off nearly 3% right now. We saw the stock starting to lose some steam on the heels of the decision.

So perhaps, investors just digesting what this move ultimately means for the company moving forward. But we finally have a resolution to this months long saga. The current Disney board will remain in place.

Disney saying they won this proxy battle by a quote, "substantial margin." Additionally, about 75% of retail shareholders voted in favor of Disney's current board. That's according to a source with knowledge of the situation.

Now, all of this doesn't mean that Nelson Peltz is necessarily going to go away during the shareholder meeting. Now, this was prior to the results. He did say no matter what the outcome was, Trian is going to continue to look at Disney's performance very closely.

And that's just something that we're going to have to continue to watch. I will say that Nelson Peltz, all these proxy battles the activist investors, I do think they pressure Disney to maybe commit to their turnaround plan a little more quickly than they would have otherwise. We have seen a lot of changes at the company, restructuring efforts, layoffs, a boost to the dividend, a partnership with Epic Games, a Taylor Swift movie, which was also asked at the shareholder meeting if they plan to release any other Taylor Swift concerts on the Disney platform.

But all this to say that the stock is performing well. It was the best year-to-date performer in the Dow in the first quarter. We're hovering at 52-week record highs. So we're in a good spot. But I don't think it fully takes the pressure off of Disney. The board, they're just going to be that much more of a microscope under this company to continue to outperform in the quarters and the years ahead.

JULIE HYMAN: Yeah, and it's interesting to see the shares fall on the day. Maybe a sell the news kind of event, or just without that Nelson Peltz poking. For at least as intensely, maybe investors are going to miss it a little bit.

But there is one area of poking of Bob Iger that he is going to have to pay attention to. And that's the succession planning. And that was something that was in the works already and was talked about by investors. But Peltz, once again, sort of highlighted it. And that's not something that Iger can ignore.

ALEXANDRA CANAL: No. And that's something that Peloton, his backers really hung their hat on when we think about where this proxy fight started. And this is because of the disaster that was Bob Chapek when he took over in 2020. He was ousted just a few years later.

Bob Iger returned to the company. And Peltz essentially arguing that the board did not do enough to make sure that Chapek was the right man for the job, that they essentially just placated to Bob Iger. Didn't push back on a lot of what he had to say.

And that's why he was fighting for a board seat. Because if anyone's going to push back on something, it's probably Nelson Peltz. But moving forward, I do think the board understands this.

They have consistently maintained that succession is a main priority for this company. Bob Iger's contract expires at the end of 2026. He's promised us that is when he is going to be leaving the company. Of course, there's always that chance that he stays a little longer.

But you have to assume that they are working on this process now. Because Disney is a very complicated company. There are different businesses. We have the parks. We have streaming. We have cable.

It's difficult for any one person to really master this. And we have heard that some internal candidates, they're shadowing Bob Iger just to make sure that they're able to do the job fully. Whoever that person is, though, going to have very big shoes to fill.

JOSH LIPTON: It was always going to be, tough, though, Ale, I Mean, for Peltz when the stock is working like this. It's up more than 30% this year. And that just tells you there are some happy shareholders.

When you talk to analysts how much credit do they give Peltz if any for that kind of move. Do they think the fact that Peltz was there rattling the cages, making noise, focused Disney leadership, maybe a little bit more than they would have been?

ALEXANDRA CANAL: They do, and you guys are going to be talking to Needham Analyst Laura Martin. She released a note prior to the results basically saying that this upped the pressure for Disney, and that ultimately, this was a good thing for shareholders. There's been other analysts on Wall Street that said, look, any proxy battle is not good for the stock in the near term at least.

And Bob Iger has looked at this as largely a distraction from what the company needs to be focused on. But I do think it put the pressure on Disney. I mean, those earnings that we got a few weeks ago, there was a ton of announcements.

If there wasn't that proxy battle hanging in the background, I wonder if we would have heard as much as we did. But I do think that was a strategic play on the part of Disney to show, look, we can pull out all the stops if we need to. And you're seeing shares react positively to all those changes.

JULIE HYMAN: Right. Thanks so much, Ale, for all of your coverage of this ongoing saga.

ALEXANDRA CANAL: I don't think it's the end though, Julie. I don't know. We'll see.

JULIE HYMAN: I was going to tell you to take a little break. But I guess not.