Disney’s Bob Iger triumphs over Nelson Peltz in bitter shareholder vote. But big challenges remain

Walt Disney Co. fought off a bruising challenge from billionaire investor Nelson Peltz as shareholders delivered their overwhelming support for chief executive Bob Iger and the company’s nominated board members.

In Disney’s most consequential board election in 20 years, Peltz fell short in his long-shot bid to wrangle a seat on the board. Preliminary results showed that Peltz mustered about 31% of the vote, according to a person close to the election but not authorized to comment.

In contrast, Iger received a resounding 94% of shareholders’ support — a decisive victory that reinforces his popularity among large institutional investors as well as small shareholders who are nostalgic for the company, its stories and theme parks. Three-quarters of “retail” shareholders (as opposed to larger institutional investors, such as mutual funds) voted in support of Disney’s slate of 12 nominees, including Iger, for the board.

Peltz’s ally, former Disney executive Jay Rasulo, also was snubbed by shareholders, along with a slate of three candidates offered by the smaller activist investor Blackwells Capital.,

Vote totals were preliminary; final results must be certified and filed with the Securities & Exchange Commission.

Despite prevailing in the proxy contest, Disney must reckon with simmering discontent among its shareholder base. This year’s proxy challenge revealed divisions not seen since the end of the Michael Eisner era.

Now, Iger and his management team must accelerate the company’s turnaround plans, including efforts to make its streaming business profitable. Disney needs to find ways to preserve the power of its ESPN sports empire, and other TV channels, while also reinvigorating its movie pipeline and expanding its theme parks and resorts business.

And board members have been tasked to quickly find a capable successor for Iger — a duty that has eluded the company for years.

The proxy campaigns homed in on Disney’s subpar stock performance over the last five years, uneven box-office results and the company’s bungled succession efforts.

Under the microscope was Disney’s board’s disastrous decision to hire Bob Chapek as CEO four years ago and extending his contract less than six months before they forced him out. Chapek, who was Iger’s handpicked replacement, made several costly missteps, including allowing Disney to become fodder for the culture war campaign of Florida Gov. Ron DeSantis. Disney racked up billions of dollars in losses on streaming.

Iger returned as CEO in late 2022 but, despite his earlier successful tenure, has struggled amid last year’s Hollywood labor unrest and the industry’s shift to streaming and Netflix’s television takeover.

The influential proxy advisor, Institutional Shareholders Service Inc., recommended putting Peltz on the board. The California Public Employees’ Retirement System, CalPERS, voted its more than 6 million shares in favor of Peltz and Rasulo, saying the pair were “qualified and capable of leading needed change in corporate governance” at Disney.

Peltz, through his Trian Fund Managment, unveiled the proxy fight last fall. It was his second stab at winning a board seat, but he withdrew his initial effort after Iger announced a deep cost-cutting, which ultimately resulted in the elimination of 8,000 jobs.

This time around, Trian spent months pounding Disney with position papers and pointed critiques over financial struggles and questionable calls, such as Disney’s 2019 acquisition of much of Rupert Murdoch’s 21st Century Fox entertainment assets. Another sore point among critics was Disney’s promotion of social messages through its films and shows.

“Despite its many advantages, Disney has lost its way,” Trian said in its letter to Disney shareholders.

Disney punched back, warning shareholders in a political campaign-styled video that it would be “disruptive and destructive” to add Peltz and Rasulo to the company’s board. Much of the company’s messaging was aimed at shareholders with small holdings, including families who feel a nostalgia with Disney’s characters and theme parks.

Blackwells Capital weighed in earlier this year by nominating a trio of candidates to Disney’s board. But Blackwells efforts were overshadowed by the presence of Peltz, whose campaign was buoyed by the support and significant stock holdings of former Marvel Entertainment Chairman Isaac “Ike” Perlmutter, who was ousted from Disney a year ago.

Disney alleged that Perlmutter had a grudge against the company and Iger, and that it was fueling the bitter and personal attacks and the campaign to shake up the board.

The opposition campaigns did not pose a direct threat to Iger’s continued tenure; his reelection to the board was uncontested. Still, the divisions exposed by Wednesday’s vote could weaken the celebrated chief’s standing.

Last summer, Disney extended Iger’s contract through 2026 to give him the runway to carry out his turnaround plan. The board also needed time to select and become comfortable with his eventual replacement.

In the closing weeks of the campaign, Disney rolled out big names in support, including former Disney CEO Michael Eisner, Laurene Powell Jobs, founder of the Emerson Collective; JPMorgan Chase CEO Jamie Dimon; “Star Wars” creator George Lucas and the heirs of company founders Walt and Roy Disney, including Abigail Disney, Walt’s great-niece who previously has been critical of Iger’s compensation.

Long before the vote, Wall Street had delivered its own referendum on Iger and his team.

Disney’s stock has gained 30% this year, fueled in large part, by Disney’s strong first-quarter earnings. Shares soared after Disney topped expectations with first-quarter net income of $2.15 billion — a 58% increase over the year earlier period. The strong earnings coincided with headline-making moves, including bringing Taylor Swift’s Eras Tour movie to Disney+ and a $1.5 billion investment in Epic Games, maker of “Fortnite.”