Disney won a hard-fought proxy battle against a group of activist investors who sought to secure seats on the company’s board of directors. The shareholder vote served as a legacy-defining victory for CEO Bob Iger.
Disney’s board triumphed by what the company called “a substantial margin” over the nominees put forward by Trian Fund Management and Blackwells Capital at its annual shareholder meeting.
Iger didn’t just beat Trian’s Nelson Peltz, but trounced him, according to a person familiar with the vote count.
Peltz’s attempt at a board seat received less than one-third of the vote, around 31 per cent, according to the source. Jay Rasulo, the former Disney finance chief who joined Peltz’s attempt, also lost by a wide margin, the person said.
Retail shareholders, which hold roughly 35 per cent of Disney stock, also voted overwhelmingly – 75 per cent – for Disney’s candidates. Still, board members typically get far bigger totals than three-quarters of the vote, suggesting Peltz captured some strong interest from Average Joe stockholders.
At the same time, Peltz spend gobs of cash on the fight, and the fact that he didn’t come particularly close to winning a board seat was surprising.
“This is by far Peltz’s biggest loss in a proxy fight,” the person familiar with the vote said.
Following its defeat, Trian issued a statement saying it was disappointed with the outcome but appreciated “the support and dialogue we have had with Disney stakeholders.”
“We are proud of the impact we have had in refocusing this company on value creation and good governance,” the statement read. “We will be watching the company’s performance and be focusing on its continued success.”
“With the distracting proxy contest now behind us, we’re eager to focus 100 per cent of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers,” Iger said.
A referendum on Iger
The investor fight that came to a head Wednesday was widely seen as a referendum on Iger, who is more than a year into his second stint as CEO.
Although Disney’s stock is up nearly 50 per cent over the past six months, some investors — including Trian and Blackwells — had hoped for higher returns and a more forceful shakeup inside the House of Mouse. In particular, Trian wanted to align pay with performance for key executives, restore Disney’s box office dominance and expand the company’s profit margin.
The biggest challenge came from Trian, which nominated its founder, 81-year-old corporate raider Peltz, to the board, along with Rasulo, a former Disney finance chief.
Peltz had expressed political differences with Iger that animated his campaign. In a recent interview with the Financial Times, Peltz disparaged “The Marvels” and “Black Panther” movies as pushing what Republicans often call a “woke” agenda.
“Why do I have to have a Marvel that’s all women? Not that I have anything against women, but why do I have to do that? Why can’t I have Marvels that are both? Why do I need an all-Black cast?” Peltz told the FT.
Disney remains one of the most successful media behemoths on the planet, but it has also seen parts of its empire stumble in recent years.
Many of its problems come with the job running a sprawling media conglomerate in the 2020s: The once-lucrative tent pole of linear TV is rapidly crumbling, while its theoretical replacement, streaming services, are burning through cash. Higher interest rates have taken their toll, and movie theater audiences have grown bored with Disney’s more recent continued Marvel spinoffs and sequels.
“In some ways, the challenges are greater than I anticipated,” Iger said last year in an interview with CNBC.
A Disney logo forms part of a menu for the Disney Plus streaming service on a computer screen in Walpole, Mass., on Nov. 13, 2019. (AP-Steven Senne / The Canadian Press)
An expensive battle for the board
Peltz and other shareholders have seized on those stumbles to rally support for change. Trian Partners has said in a regulatory filing that it expected to spend about US$25 million on its campaign for board seats.
If the Trian group had succeeded in securing board seats, it would have been a seismic blow to Iger’s reputation as one of Hollywood’s most formidable power players. And it would have allowed the activists to potentially shape or disrupt Iger’s vision for the corporate turnaround.
But it wasn’t clear that Peltz’s plan — essentially maximizing profit and tying executive pay to performance — would be substantially different from what Iger was already doing.
A year ago, Iger announced he was laying off 7,000 staff and implementing a restructuring plan aimed at energizing Disney’s core creative departments.
There are early signs his turnaround plan is working. In February, Disney surprised investors with its first-quarter earnings, announcing it would grow earnings per share by 20 per cent this year.
Having fended off Peltz and Trian, at least for now, Iger likely has some runway to focus on the growth phase of his plan, at least until his contract runs out in 2026, when Iger promises he’ll step down. But one former Disney executive said the fight is far from over.
“The fact that it has gotten this much traction tells you that there is a lot of dissatisfaction,” the former executive, who requested anonymity to speak candidly, told CNN’s Oliver Darcy ahead of the vote.
CNN’s Samantha Delouya and Oliver Darcy contributed to this report.
HALIFAX – Ottawa is negotiating a $500-million bailout for Nova Scotia’s privately owned electric utility, saying the money will be used to prevent a big spike in electricity rates.
Federal Natural Resources Minister Jonathan Wilkinson made the announcement today in Halifax, saying Nova Scotia Power Inc. needs the money to cover higher costs resulting from the delayed delivery of electricity from the Muskrat Falls hydroelectric plant in Labrador.
Wilkinson says that without the money, the subsidiary of Emera Inc. would have had to increase rates by 19 per cent over “the short term.”
Nova Scotia Power CEO Peter Gregg says the deal, once approved by the province’s energy regulator, will keep rate increases limited “to be around the rate of inflation,” as costs are spread over a number of years.
The utility helped pay for construction of an underwater transmission link between Newfoundland and Nova Scotia, but the Muskrat Falls project has not been consistent in delivering electricity over the past five years.
Those delays forced Nova Scotia Power to spend more on generating its own electricity.
This report by The Canadian Press was first published Sept. 16, 2024.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
