DEFA14A: Disney Responds to ISS Recommendation on Director Nominees Ahead of Annual Meeting

Disney defends its director nominees, particularly Maria Elena Lagomasino, against recommendations from ISS to support Trian nominee Nelson Peltz, emphasizing the board's commitment to shareholder value and good governance.

Summary

• The Walt Disney Company has responded to a report by Institutional Shareholder Services (ISS) regarding the election of directors at the company's upcoming Annual Meeting on April 3, 2024.
• Disney expressed disappointment with ISS's recommendation to support Trian nominee Nelson Peltz, while acknowledging ISS's support for Michael Froman and its recommendation to withhold support for dissident directors Jay Rasulo and the Blackwells nominees.
• The company strongly defends its 12 director nominees, particularly Maria Elena Lagomasino, highlighting her extensive experience in capital markets, corporate governance, and fiduciary responsibility.
• Disney argues that Nelson Peltz does not bring additive skills to the board and lacks a meaningful plan to deliver superior shareholder value.
• The company also points out the involvement of Ike Perlmutter, Trians silent partner, and his potential negative influence on the board if Peltz is elected.
• Disney urges shareholders to vote FOR all 12 of its director nominees on the WHITE proxy card.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While Disney is defending its board against activist investors, it highlights positive aspects like ISS support for some nominees and the qualifications of its directors. However, the ongoing proxy fight introduces uncertainty.

Positives

• ISS supports Michael Froman and recommends withholding support for dissident directors Jay Rasulo and the Blackwells nominees.
• Disney's Board is focused on long-term shareholder value creation and succession planning.
• The Board is committed to good governance practices.
• Maria Elena Lagomasino brings a strong shareholder perspective to the Board as a founder of the Institute for the Fiduciary Standard.

Negatives

• ISS recommends supporting Trian nominee Nelson Peltz, which Disney disagrees with.
• Trian's silent partner, Ike Perlmutter, has a fraught history and longstanding personal agenda against Disney's CEO, Robert A. Iger, which could inhibit Nelson Peltz from working constructively with Disney's Board.

Risks

• Electing Nelson Peltz could threaten the company's continued turnaround due to his potential inability to work constructively with the Board.
• Replacing Disney's nominees with Trian Group or Blackwells nominees could deprive the company of skills and expertise required to drive value for shareholders.
• Deterioration in domestic or global economic conditions, competitive conditions, health concerns, international, political or military developments, regulatory or legal developments, technological developments, labor markets and activities, adverse weather conditions or natural disasters, and availability of content could affect Disney's business.

Future Outlook

The document contains forward-looking statements regarding the company's expectations, beliefs, plans, strategies, business or financial prospects or outlook, future shareholder value, expected growth and value creation, profitability, investments, capital allocation, earnings expectations, expected drivers and guidance, expected benefits of new initiatives, cost reductions and efficiencies, content offerings, priorities or performance.

Management Comments

• Mark Parker, Chairman of The Walt Disney Company Board of Directors, stated that they were heartened to see support for Michael Froman and ISS recommendation to withhold on dissident directors Jay Rasulo and the Blackwells nominees, but strongly believe that ISS reached the wrong conclusion in its recent report when it comes to adding Nelson Peltz to the board.
• Mark Parker stated that, in contrast to Glass Lewis, ISS fails to acknowledge the breadth of perspective and expertise Ms. Lagomasino adds to the Board.
• The Walt Disney Company disagrees with ISSs recommendation to support Trian nominee Nelson Peltz and believes Disneys 12 Board nominees are best qualified to provide diligent oversight of management and create sustainable shareholder value.

Industry Context

This announcement is related to the ongoing proxy fight between Disney and activist investors Trian Group and Blackwells Capital, who are seeking to gain board seats at Disney's upcoming annual meeting. The recommendations from ISS and Glass Lewis, two influential proxy advisory firms, are being closely watched by investors as they make their voting decisions.

Comparison to Industry Standards

• The document references Glass Lewis, another proxy advisory firm, which supports Disney's nominees, indicating a divergence of opinion among industry experts.
• The mention of Maria Elena Lagomasino's experience at JPMorgan Private Bank and The Coca-Cola Company provides benchmarks for her qualifications compared to other board members in similar large corporations.

Stakeholder Impact

• The outcome of the proxy vote will impact shareholders by influencing the composition of the Board of Directors and the company's strategic direction.
• The Board's decisions will affect employees, customers, and other stakeholders through the company's operations and performance.

Next Steps

• Shareholders will vote on the election of directors at the Annual Meeting on April 3, 2024.
• Disney will continue to advocate for its 12 director nominees.

Key Dates

Keywords

Disney, ISS, Director Nominees, Shareholders, Nelson Peltz, Maria Elena Lagomasino, Board of Directors, Proxy, Annual Meeting, Corporate Governance, Trian Group, Blackwells