The Trian Group, led by Nelson Peltz, has filed their proxy statement as they battle the Disney Board’s opposition to have him join the board. Included in the proxy statement, is a timeline that lays out Nelson Peltz’s discussions with Disney that stretch back to July 2022. We have laid out the timeline that combines that timeline with other information we know from Disney filings.
Nelson Peltz
July 11, 2022: Nelson Peltz and Bob Chapek, together with their respective wives, had lunch at Disney’s Hotel New York at Disneyland Paris and discussed various matters, including Mr. Peltz’s long-time interest in Disney, his history of working successfully and collegially with management teams and boards to turn around and improve company performance and his interest in potentially joining the Board to provide fresh perspectives and a shareholder’s perspective into the boardroom.
Mid-July 2022: Nelson Peltz had conversations with Board members Safra Catz and Amy Chang about various matters, including his interest in potentially joining the Board to help turn around the Company and drive long-term shareholder value.
August 10, 2022: Disney delivered their third quarter earnings report.
September 30, 2022: Disney reaches standstill agreement with another activist investor, Dan Loeb’s Third Point LLC, and agrees to add Carolyn Everson to the board effective November 21.
November 8. 2022: Disney delivered their 4th quarter earnings report. With losses larger than expected in the streaming business, Disney stock tumbles.
On or about November 9, 2022: Nelson Peltz called Bob Chapek to initiate a formal dialogue between the Company and the Trian Group. They agreed to arrange a meeting on a mutually convenient date.
November 12, 2022: Representatives of the Trian Group, including Nelson Peltz and Matthew Peltz, met with Bob Chapek to discuss a variety of topics, including the Trian Group’s background and investment philosophy, the reasons for the Trian Group’s investment in the Company, and concerns over the Company’s performance, its strategic and operating decisions (including the acquisition of the 21st Century Fox business and Disney theme park operations) and executive compensation. The Trian Group’s representatives communicated to Bob Chapek their belief that the Company should pursue opportunities to increase accountability and realize additional earnings growth from cost savings initiatives.
On or about November 15, 2022: Bob Chapek informed Nelson Peltz that they should not speak further about Disney and that Mr. Peltz should instead speak to Christine McCarthy, Senior Executive Vice President and Chief Financial Officer of the Company
November 17, 2022: Christine McCarthy and Nelson Peltz spoke by telephone seeking to schedule a meeting. Christine only offered an in-person meeting in Los Angeles for after Thanksgiving with Nelson Peltz, herself and Horacio Gutierrez, Senior Executive Vice President and General Counsel of the Company. In light of the Company’s upcoming deadline of December 9, 2022 to submit an advance notice of nomination for directors at the 2023 Annual Meeting, Nelson Peltz offered a number of alternatives for an in person meeting with Christine. McCarthy at an earlier date. Christine rejected these alternatives. Eventually, a virtual meeting was arranged between the Trian Group, Bob Iger, the Company’s recently-appointed Chief Executive Officer, Christine McCarthy and Horacio Gutierrez.
November 20, 2022: Disney announces that Bob Iger would replace Bob Chapek as Disney’s CEO as well as replacing him on the board of directors.
November 23, 2022: Nelson Peltz, Matthew Peltz and Brian Schorr, Chief Legal Officer and a Partner of Trian Management, held a virtual meeting with Bob Iger, Christine McCarthy, and Horacio Gutierrez to discuss a number of issues, including those referenced in this Proxy Statement. The Trian Group representatives emphasized that the Trian Group did not want to engage in a lengthy and costly proxy fight and that the Trian Group supported Mr. Iger’s return to the Board and his reappointment as Chief Executive Officer. The Disney representatives raised the idea of a mutually agreed upon independent director not affiliated with the Trian Group being added to the Board. The Trian Group conveyed to Mr. Iger and the other Disney representatives that the Trian Group’s interest in direct Board representation by a Trian partner was intended to foster an ownership mentality in the boardroom and to stimulate additional discussion among Disney directors regarding the challenges faced by the Company. During this meeting, which lasted approximately 30 minutes, Nelson Peltz shared his views on how his joining the Board would best position him to help the Company to: (i) augment total shareholder return, (ii) improve operational performance, (iii) enhance capital allocation and (iv) create and execute a thoughtful, strategic and actionable CEO succession plan. The Trian Group also discussed Mr. Peltz’s successful track record at The H. J. Heinz Company, The Procter & Gamble Company and other branded consumer companies, noting that Mr. Peltz developed an excellent working relationship with P&G’s former CEO and Chairman David Taylor, even after Mr. Taylor and P&G’s board of directors resisted Nelson Peltz’s appointment and election. At the conclusion of the November 23, 2022 Virtual Meeting, the Trian Group representatives informed Bob Iger and the other Disney representatives that while the Trian Group wished to continue a constructive dialogue with the Company, the Nominating Funds might submit an advance notice of nomination to preserve their options in light of the Company’s upcoming nomination deadline.
November 23, 2022: Horacio Gutierrez sent Mr. Schorr an email indicating that the Company was having a Board meeting on November 30, 2022 where the Board would discuss adding Nelson Peltz to the Board. Horacio Gutierrez also noted that it might be smart for the Trian Group to wait to submit their advance notice letter until after that Board meeting.
November 30, 2022: Horacio Gutierrez informed Mr. Schorr by telephone that the Board had met and that the Company would not be inviting Nelson Peltz to join the Board. Horacio Gutierrez did not offer Nelson Peltz or the Trian Group an invitation to meet with the Board or a subset of the Board (such as the Governance and Nominating Committee) to present their views on the Company.
December 1, 2022: the Nominating Funds delivered the Nomination Notice to the Company, informing it of their intention to nominate Nelson Peltz (and if applicable, the Alternate Trian Nominee) for election to the Board and to propose the repeal of each provision or amendment of the Bylaws that has been adopted by the Board subsequent to March 20, 2019, in each case, at the 2023 Annual Meeting.
December 20, 2022: Bob Iger informed Nelson Peltz that he could not speak to him without first talking to Horacio Gutierrez. Nelson Peltz asked Bob Iger to check and see if there was a way for the two of them to be able to communicate in order to see if there was a productive way to move things forward. Nelson Peltz also informed Bob Iger that if he (Mr. Peltz) was not invited to join the Board, then it would be up to shareholders to determine the make-up of the Board. As part of the shareholder voting process, the Trian Group would present its white paper setting forth its strategic and operating initiatives and making the Trian’s Group’s case for change based on the facts.
Later that same day Horacio Gutierrez called Mr. Schorr to inform him that Bob Iger had been advised not to speak with Nelson Peltz. Mr. Schorr informed Mr. Gutierrez that he was surprised that the Company had not offered the Trian Group the opportunity to meet with the Board or a subset of the Board. Mr. Gutierrez indicated that he and the other Disney representatives had been confused that the Trian Group had wanted to meet with the Board. Mr. Gutierrez indicated, however, that he was working on scheduling a virtual Board meeting in January 2023 and that he would look into seeing whether Nelson Peltz and Matthew Peltz could present at such meeting.
Following the call between Mr. Gutierrez and Mr. Schorr, Mr. Iger called Nelson Peltz by telephone and confirmed that a virtual Board meeting for early January was being scheduled, but was unlikely to occur before January 6, 2023 due to Mr. Iger’s plans to sail his yacht off the coast of New Zealand.
Subsequent to December 20, 2022, representatives of the Trian Group and Disney worked out logistics for the Trian Group’s representatives to attend a January 10, 2023 virtual Board meeting
December 22, 2022: Nelson Peltz contacted board member Safra Catz who informed him that she was not permitted to speak to him.
December 28, 2022: A Disney representative notified the Trian Group that the January 10, 2023 Virtual Meeting would be limited to 30 minutes (after a request by the Trian Group, the Company agreed to provide the Trian Group an additional fifteen minutes) and prior to such meeting, the Trian Group would have fifteen minutes to speak with Mr. Iger, Ms. McCarthy and Mr. Gutierrez. Representatives of the Trian Group expressed their disappointment with these time limitations, given they were in the process of preparing a detailed presentation for this meeting, and believed that these time limitations would hinder their ability to ensure a productive meeting.
January 8, 2023: Mr. Schorr sent Mr. Gutierrez an email, in advance of the January 10, 2023 Virtual Meeting, requesting that pre-read materials be distributed as promptly as practicable to the members of the Board so that the directors would have time to read and reflect on the materials and formulate questions. The pre-read materials consisted of (i) a letter to the Board which explained why the Trian Group has a nearly $1 billion investment in Disney and how, with a partner of the Trian Group in the boardroom, the Trian Group has helped management teams create sustainable long-term shareholder value and why the Trian Group believes that it can help do the same at Disney with Nelson Peltz as a Disney director, (ii) the discussion materials the Trian Group would be using at the January 10, 2023 Virtual Meeting and (iii) third party commentary (from investors, analysts, proxy advisory firms, commentators and reporters from national media outlets and CEOs and directors that have worked with Nelson Peltz) from the Trian Group’s proxy contest with The Procter & Gamble Company. The letter also noted how disappointed the Trian Group was not to have had a robust interaction or discussion with the Disney Board and pointed out how in its most recent engagement before Disney, there were several in-person meetings with the Chairman and CEO and how every member of the nominating committee and nearly all members of the company’s board spent time with representatives of the Trian Group in-person or over video conference in small groups, in order to better get to know the Trian Management team.
January 10, 20203: Immediately prior to the virtual meeting, Nelson Peltz, Matt Peltz and Ryan Bunch, a Senior Analyst and Partner at Trian Management met informally with Bob. Iger and Horacio Gutierrez and Christine McCarthy for approximately 10-15 minutes at the Company’s executive offices in Burbank California, during which time there was no substantive engagement.
The virtual meeting took place with Nelson Peltz, Matt Peltz and Mr. Bunch, attending in person at the Company’s executive offices in Burbank, CA, with the Board (other than Mr. Iger) attending virtually. In addition, certain members of the Executive Leadership Team, (none of whom had sales, marketing or operating business profit and loss responsibility), including Mr. Gutierrez and Ms. McCarthy, also attended in person. The Trian Group’s representatives explained that they viewed Disney as one of the most advantaged consumer entertainment companies in the world, with unrivaled global scale, irreplaceable brands and a myriad of opportunities to monetize its intellectual property better than its peers. However, despite Disney’s significant advantages, recent share price and operating performance have been disappointing, with Disney’s stock trading near an eight-year low, the Company’s total shareholder return materially under-performing the S&P 500 Index over 1-year, 3-year, 5-year and 10-year-periods, earnings per share declining by 50% since fiscal year 2018, the common stock dividend being eliminated for the first time in over 50 years and free cash flow declining nearly 90% since fiscal year 2018 despite record Parks performance, an aggressive pivot to streaming and the acquisition of the 21st Century Fox business. The Trian Group’s representatives went on to explain to the Board what they believed to be the root causes of Disney’s underperformance (i.e., poor corporate governance, strategy and operations and capital allocation) and why they believed the Company needed to proceed with urgency to develop the correct strategies and operational formulas to effect a necessary turnaround. The Trian Group’s representatives also discussed why they believed that by expanding the Board to add Nelson Peltz as a director, an ownership mentality and an operating perspective would be brought into the boardroom and he would be able to work with management and the Board, with full transparency and information, to help Disney “restore the magic” and address its challenges. In addition, Messrs. Nelson Peltz, Matthew Peltz and Ryan Bunch provided the Board with an overview of the Trian Group’s long-term investing strategy, its significant experience and success working collegially with other directors and management teams of Trian portfolio companies facing significant challenges (including P&G), and described how the Trian Group planned to work collaboratively with Disney’s leadership to help create sustainable, long-term value at Disney by focusing on how to fix corporate governance, strategy and operations and capital allocation. The Trian Group’s representatives emphasized that they were not looking to replace Mr. Iger or break up the Company, but did want to ensure a successful a CEO transition within 2 years and would look to help restore the dividend by fiscal 2025. Following the Trian Group’s presentation, which lasted approximately 45 minutes, during which only one question was asked (by Mr. Iger), the Trian Group’s representatives requested that the Board let the Trian Group know whether the Company would add Nelson Peltz to the Board. The Trian Group’s representatives noted that if the Board decided not to add Mr. Peltz as a director or did not advise the Trian Group of its decision by January 11, then it would be up to shareholders, as the owners of the Company, to determine the composition of the Board.
January 11, 2023: Susan Arnold, the Company’s Chairman of the Board, called Nelson Peltz and, in lieu of offering Mr. Peltz a seat on the Board, offered to have the Company enter into an information sharing and observer/advisory arrangement, which would allow Trian Management to have limited access to certain confidential information about the Company and to engage with members of the Company’s management team and Board. Susan Arnold informed Nelson Peltz that entry into the observer/advisory arrangement would be conditioned on the Trian Group entering into a standstill agreement (which Trian Management expected would contain restrictions impacting its ability to acquire additional Disney shares, vote its existing Disney shares, or otherwise exercise its rights as a Disney shareholder). In response, Nelson Peltz again requested representation on the Board and asked Susan Arnold to consult with the Board. Susan. Arnold called back a short time later and advised Nelson Peltz that the Board had not changed its decision and was unwilling to add him as a director.
Disney issued a press release announcing that Mark Parker will replace Susan Arnold as Chairman of the Board at the next shareholder meeting as well as stating their opposition to having Nelson Peltz joining the Disney Board.
January 11, 2023:The Trian Group issued a press release and launched a social media campaign and website (www.RestoretheMagic.com)
January 12, 2023: The Trian Group filed its preliminary proxy statement with respect to the 2023 Annual Meeting.