Top proxy adviser Glass Lewis backs Disney’s Bob Iger in Nelson Peltz fight

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Walt Disney chief executive Bob Iger has won the backing of influential proxy adviser Glass Lewis in his battle against billionaire activist Nelson Peltz, with the group unconvinced that the latter’s plans for the entertainment group are “superior”.

In a report published on Monday, Glass Lewis recommended that shareholders “withhold” their support for Peltz, who is trying to join the Disney board, and Jay Rasulo, another candidate put forward by Trian Partners, Peltz’s investment group. Rasulo was previously Disney’s chief financial officer.

Glass Lewis instead urged shareholders to vote for the current board alongside two new directors put forward by Disney in November — outgoing Morgan Stanley chair and chief executive James Gorman and Sir Jeremy Darroch, former group CEO of Sky.

Along with rival ISS, Glass Lewis is one of the most powerful proxy advisers that make recommendations to shareholders on how to vote at annual general meetings and on matters of corporate governance.

Glass Lewis said on Monday it was not convinced that alternate plans and candidates “are likely to represent a superior change relative to Disney’s current composition”.

The recommendation marks a blow for Peltz, who is waging his second proxy battle against Disney in as many years. Peltz abandoned an attempt to secure a single Disney board seat in February last year after Iger initiated a series of cost cuts and pledged to reinstate a dividend. 

But in October Ike Perlmutter, the head of Marvel who sold the comic book publisher to Disney in 2009 and worked there until he was fired a year ago, gave Peltz the voting rights of his Disney shares. Dissatisfied with Disney’s progress, Peltz relaunched his campaign, this time for two board seats, the following month.

Trian controls a stake in Disney worth approximately $3bn, which includes the shares of Perlmutter, a friend of Peltz. Trian declined to comment on Glass Lewis’s recommendation.

The proxy battle between Trian and Disney has intensified in recent weeks as the entertainment company’s annual shareholder meeting on April 3 approaches. The New York-based hedge fund released a 133-page report this month that took aim at Disney’s board and set out initiatives to “restore the magic”. 

Among them is a proposal to “right-size” legacy divisions, such as Disney’s studio business and its linear TV networks, by spinning them out and finding strategic partners. Trian also recommended that Disney+ and Hulu be fully consolidated and said it was “sceptical” of ESPN’s viability as a standalone streaming platform. 

In response, Disney filed its own report titled “You cannot ‘restore the magic’ if you don’t understand magic”, in which the company argued that Peltz’s approach would “absolutely damage Disney”. 

Earlier this month, JPMorgan Chase chief executive Jamie Dimon threw his weight behind Iger, calling him “a first-class executive and outstanding leader”. The Wall Street lender has a long-standing relationship with Disney, which has generated tens of millions in fees for the bank. It is also representing the company in its fight against Peltz.  

In its report, Glass Lewis said that the 15 months since Iger returned for a second stint as CEO “have provided management and an incrementally reconstituted board with adequate opportunity to launch a more credible succession program and develop, communicate and execute on several key initiatives which appear to reasonably target acknowledged operational and financial weaknesses at Disney”. 

All of this “substantially raises the bar for change at this time”, the proxy adviser said.

Peltz is best known for his activist campaigns at consumer goods companies such as Procter & Gamble, Wendy’s and Unilever.


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