SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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the Registrant o
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Party other than the Registrant x
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o |
Preliminary Proxy Statement |
o |
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14a-6(e)(2)) |
o |
Definitive Proxy Statement |
o |
Definitive Additional Materials |
x |
Soliciting Material Under Rule 14a-12 |
The Walt Disney Company
(Name of Registrant as Specified in Its Charter)
Trian Fund Management, L.P.
Trian Fund Management GP, LLC
Trian Partners, L.P.
Trian Partners Parallel Fund I, L.P.
Trian Partners Master Fund, L.P.
Trian Partners Fund (Sub)-G, L.P.
Trian Partners Strategic Investment Fund-A, L.P.
Trian Partners Strategic Investment Fund-N, L.P.
Trian Partners Strategic Fund-G II, L.P.
Trian Partners Strategic Fund-G III, L.P.
Trian Partners Strategic Fund-K, L.P.
Trian Partners Co-Investment Opportunities Fund, Ltd.
Nelson Peltz
Peter W. May
Edward P. Garden
Matthew Peltz
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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TRIAN NOMINATES NELSON PELTZ FOR ELECTION TO DISNEY
BOARD
Will File Preliminary Proxy Statement for Disney’s 2023 Annual
Meeting
Shareholder Materials Available at RestoreTheMagic.com
NEW YORK, January 11, 2023 – Trian Fund
Management, L.P. (“Trian”), whose investment
funds collectively own approximately 9.4 million
common shares of The Walt Disney Company (NYSE: DIS) (“Disney”
or the “Company”) valued at approximately $900
million[i], tomorrow will file a preliminary proxy
statement with the Securities and Exchange Commission for the
election of Nelson Peltz, its Chief Executive Officer and Founding
Partner, to Disney’s Board of Directors at the 2023 Annual Meeting
of Shareholders.
Disney is one of the most advantaged consumer entertainment
companies in the world, with unrivaled global scale, irreplaceable
brands, and opportunities to monetize its intellectual property
(“IP”) better than its peers by leveraging the Disney “flywheel”
(e.g., networks, theme parks, consumer products, etc.). As such,
Disney should be well positioned to navigate the ongoing transition
from legacy content distribution channels to streaming.
However, despite Disney’s significant advantages, recent share
price and operating performance have been disappointing. Disney
shares are currently trading near an 8-year low despite the
Company’s recent decision to re-hire Bob Iger as CEO (see
Appendix A). The Company’s total shareholder return (“TSR”)
has materially underperformed the S&P 500 over 1-year, 3-year,
5-year and 10-year periods by -24%, -60%, -66%, and -116%,
respectively[ii] (see Appendix B). Operating
performance has deteriorated, including a 50% decline in adjusted
Earnings Per Share (“EPS”) since FY 2018 despite Parks
profitability surpassing historical levels (see Appendix
C).
Trian
believes that Disney’s recent performance reflects the hard truth
that it is a company in crisis with many challenges weighing on
investor sentiment. While we acknowledge that Disney, like many
media companies, is undergoing a challenging pivot to streaming,
Disney also benefits from owning best-in-class intellectual
property, a more diversified business mix, and a Parks business
that is enjoying all-time high profitability. As such, we believe
that the Company’s current problems are primarily self-inflicted
and need to be addressed immediately, including:
POOR Corporate Governance
|
· |
Failed
succession planning |
|
· |
“Over-the top”
compensation practices |
|
· |
Minimal
shareholder engagement, including an apparent unwillingness to
fully engage constructively with Trian
|
POOR Strategy & Operations
|
· |
Flawed
Direct-to-Consumer (“DTC”) strategy struggling with profitability,
despite reaching similar revenues as Netflix and having a
significant IP advantage |
|
· |
Lack of
overall cost discipline |
|
· |
Overearning in the
Parks business to subsidize streaming losses |
POOR Capital Allocation
|
· |
Since
2018, Disney’s EPS has been cut in half despite $162bn spent on
mergers and acquisitions (“M&A”), capital expenditures
(“Capex”) and content – approximately equal to Disney’s entire
current market capitalization[iii] |
|
· |
Management, in Trian’s
view, has shown poor judgment on recent M&A efforts including
overpaying for the 21st Century Fox assets and bidding
aggressively for Sky plc |
|
· |
Increased financial
leverage and deteriorating cash flow resulting in the
elimination of the dividend that had been paid for 50+
years, even as COVID receded and Parks profitability surpassed
historical levels |
“Disney
has an incredible legacy as one of the leading and most
successful consumer entertainment companies in the world, having
built some of the most celebrated consumer brands and an
unparalleled content portfolio that resonates
with audiences of all ages across the globe. But in recent
years, the Company has lost its way resulting in a rapid
deterioration in its financial performance from a consistent
dividend-paying, high free cash flow generative business into a
highly leveraged enterprise with reduced earnings power and weak
free cash flow conversion,” said Nelson Peltz.
Peltz
continued, “Disney has enormous potential, but today is struggling
with numerous challenges and must act with urgency to accelerate
profitability in its DTC business. As a highly engaged
shareholder serving on Disney’s Board, my goal would be to work
collaboratively with Bob Iger and other directors to take
decisive action that will result in improved operations and
financial performance, enhanced shareholder value and a robust
succession planning process that will set the stage for sustainable
growth over the long term. Trian has studied Disney’s business for
over a decade, and we are confident that as an independent
voice I can add significant value in the boardroom and represent
the interests of all Disney shareholders.”
Trian Believes Nelson Peltz Can Help
Disney Address Its Challenges
Trian
believes that it can help Disney restore the magic and
reclaim its position as a best-in-class company that delivers
highly attractive returns for shareholders. Mr. Peltz and
Trian have significant expertise
and successful track records of working with management
teams and boards to turn around companies with strong
underlying fundamentals that have drifted off course. Mr.
Peltz, as a director with meaningful ownership of Disney’s stock,
will also bring an ownership mentality to the boardroom and will
seek to increase transparency and accountability.
At
companies in which Trian has invested where Mr. Peltz has served on
the board of directors, company TSR growth during Mr.
Peltz’s board tenure has, on average, outpaced the S&P 500 by
~900 basis points annually[iv].
Upon
attaining Board representation, Trian will look to work
collaboratively with Disney’s leadership to:
FIX Corporate Governance
|
· |
Develop
an effective succession plan |
|
· |
Align
compensation with performance |
FIX Strategy & Operations
|
· |
Improve
DTC operating margins |
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Eliminate redundant
and/or excessive costs |
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· |
Refocus
the creative engine to drive profitable growth |
FIX Capital Allocation
|
· |
Enhance
accountability on capital allocation |
|
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Reinstate the dividend
by FY 2025 |
What Trian is Pushing FOR and is NOT Pushing For
Trian’s objective is to create sustainable, long-term value at
Disney by working WITH Bob Iger and the Disney Board. We recognize
that Disney is undergoing a period of significant change and we are
NOT trying to create additional instability.
TRIAN IS:
NOT
looking to replace Bob Iger |
FOR
ensuring a successful CEO succession within 2
years |
NOT
advocating for a break-up of Disney |
FOR
reinvigorating the Disney “flywheel” |
NOT
advocating to increase financial leverage |
FOR
orderly deleveraging |
NOT
seeking to cut costs that impact product quality or customer
experience |
FOR
driving efficiencies and additional profits |
NOT
advocating for aggressive price increases at the expense of
customer experience |
FOR
ensuring customers get real value across all business
lines |
NOT
advocating for a permanent dividend cut |
FOR
reinstating the dividend by FY 2025 |
Trian’s preference was to avoid a proxy
contest.
To
that end, Trian has tried to effect a resolution through
constructive dialogues with members of the Disney Board
and management team over the past several months. Trian is
disappointed that, to date, the Company has rejected Trian’s
request to expand the Disney Board by one director who can
provide fresh perspectives and represent shareholders’ interests –
an action we strongly believe would lead to positive
change with no discernible downside.
Nelson Peltz’s Background and Experience
Nelson
Peltz is Chief Executive Officer and a Founding Partner of Trian.
Mr. Peltz, along with Ed Garden and Peter May, founded Trian
in November 2005.
Mr.
Peltz serves as the non-executive Chairman of The Wendy’s Company.
Mr. Peltz is also a director of Unilever PLC and Madison Square
Garden Sports Corp. (f/k/a The Madison Square Garden Company). He
previously served as a director of Janus Henderson Group plc from
February 2022 to November 2022, Invesco Ltd. from October 2020 to
February 2022, The Procter & Gamble Company from March 2018 to
October 2021, Sysco Corporation from August 2015 to August 2021,
Legg Mason, Inc. from October 2009 to December 2014 and May 2019 to
July 2020, Mondelēz International, Inc. from January 2014 to March
2018, MSG Networks Inc. from December 2014 to September 2015,
Ingersoll-Rand plc from August 2012 to June 2014, and
H. J. Heinz Company from September 2006 to June 2013.
Mr. Peltz was recognized by The National Association of
Corporate Directors in 2010, 2011 and 2012 as among the most
influential people in the global corporate governance
arena.
From
April 1993 through June 2007, Mr. Peltz served as Chairman and
Chief Executive Officer of Triarc Companies, Inc. which during that
period of time owned Arby’s Restaurant Group, Inc. and the Snapple
Beverage Group, as well as other consumer and industrial
businesses. From 1983 until December 1988, Mr. Peltz was Chairman
and Chief Executive Officer and a director of Triangle Industries,
Inc., the largest packaging company in the world and a Fortune 100
industrial company, after which that company was acquired by
Pechiney, S.A., a leading international metals and packaging
company.
A
native of Brooklyn, New York, Mr. Peltz attended The Wharton School
of the University of Pennsylvania.
More
information about Trian and its thesis for constructive change at
Disney can be found at: RestoreTheMagic.com
About Trian Fund Management, L.P.
Founded in 2005, Trian Fund Management, L.P. (“Trian”) is a
multi-billion dollar investment management firm. Trian is a highly
engaged shareowner that combines concentrated public equity
ownership with operational expertise. Leveraging the 40+ years’
operating experience of our Founding Partners, Nelson Peltz, Ed
Garden and Peter May, Trian seeks to invest in high quality but
undervalued and underperforming public companies and to work
collaboratively with management teams and boards to help companies
execute operational and strategic initiatives designed to drive
long-term sustainable earnings growth for the benefit of all
stakeholders.
Media Contacts:
Anne
A. Tarbell
(212)
451-3030
atarbell@trianpartners.com
Paul
Caminiti / Pamela Greene / Jacqueline Zuhse
Reevemark
(212)
433-4600
Trian@reevemark.com
Investor Contacts:
Matthew Peltz
(212)
451-3060
mpeltz@trianpartners.com
Ryan
Bunch
(212)
451-3176
rbunch@trianpartners.com
Bruce
Goldfarb / Pat McHugh
Okapi
Partners LLC
(212)
297-0720
(877)
629-6357
info@okapipartners.com
[i]
Based on
the closing price of Disney’s common stock on 1/10/23.
[ii] Source: FactSet as of 1/10/23. References to the
S&P 500 throughout this press release refer to the S&P 500
Total Return Index, which includes the price changes of all
underlying stocks and all dividends reinvested.
[iii] Source: Market capitalization as of 1/10/23 from
FactSet. $162bn represents
cumulative M&A (net of divestitures), Capital Expenditures, and
content spend from FY 2019 – FY 2022.
[iv] Source: FactSet as of 12/31/22. Note: Companies
where Nelson Peltz has served on the board of directors and in
which Trian has invested consist of The Wendy’s Company, H.J. Heinz
Company, Sysco Corporation, Legg Mason Inc. on two separate
occasions (and treated as two separate investments for purposes of
the analysis), Mondelēz International, Inc., The Procter &
Gamble Company, Ingersoll-Rand Inc., Invesco Ltd., Janus Henderson
plc, and Unilever plc. Such investments do not represent all of the
investments purchased or sold for Trian’s clients and it should not
be assumed that any or all of these investments were or will be
profitable. We highlight the S&P 500 Index here only as a
widely recognized index, however, for various reasons the
performance of the index and that of Trian’s Investments may not be
comparable. One cannot invest directly in an index. While Trian
believes that the total shareholder returns (“TSR”) at Trian’s
investments where Nelson Peltz served on the board of directors was
attributable in part to the cumulative effects of the
implementation of operational and strategic initiatives during the
period of Trian’s active involvement, there is no objective method
to confirm what portion of such returns were attributable to
Trian’s efforts and what portion may have been attributable to
other factors. This press release does not provide the performance
of Trian’s funds or the performance of individual fund investments.
In order to perform this analysis, Trian (1) calculated the
annualized TSR (consisting of the change in stock price plus the
effect of dividends received) at each of the companies listed above
during Nelson Peltz’s board tenure at each company (with Legg Mason
Inc. treated as two separate investments for purposes of this
analysis), (2) compared each company’s TSR figure with the
annualized TSR of the S&P 500 Index during the same time
period, and (3) calculated the simple average of annualized TSR
over- or under-performance versus the S&P 500 Index at each
company (or each investment, in the case of Legg Mason Inc.). Based
on the foregoing methodology, Trian calculated that companies in
which Trian has invested where Mr. Peltz has served on the board of
directors have, on average, generated annualized TSR growth during
Mr. Peltz’s board tenure exceeding that of the S&P 500 Index by
+872 bps as of 12/31/22. This analysis includes Unilever plc, where
Mr. Peltz has served as a director for less than one year.
Disclaimer
Except as otherwise set forth in this press release, the views
expressed in this press release reflect the opinions of Trian Fund
Management, L.P. and its affiliates (“Trian”), and are based
on publicly available information with respect to the Company.
Trian recognizes that there may be confidential information in the
possession of the Company that could lead it or others to disagree
with Trian’s conclusions. Trian reserves the right to change any of
its opinions expressed herein at any time as it deems appropriate
and disclaims any obligation to notify the market or any other
party of any such change, except as required by law. Trian
disclaims any obligation to update the information or opinions
contained in this press release. For the avoidance of doubt, this
press release is not affiliated with or endorsed by Disney.
This press release is provided merely as information and is not
intended to be, nor should it be construed as, an offer to sell or
a solicitation of an offer to buy any security nor as a
recommendation to purchase or sell any security. Funds managed by
Trian currently beneficially own shares of the Company. These funds
are in the business of trading – buying and selling– securities and
intend to continue trading in the securities of the Company. You
should assume such funds may from time to time sell all or a
portion of their holdings of the Company in open market
transactions or otherwise, buy additional shares (in open market or
privately negotiated transactions or otherwise), or trade in
options, puts, calls, swaps or other derivative instruments
relating to such shares.
Some of the materials in this press release contain forward-looking
statements. All statements contained herein that are not clearly
historical in nature or that necessary depend on future events are
forward-looking, and the words “anticipate,” “believe,” “expect,”
“potential,” “could,” “opportunity,” “estimate,” “plan,” and
similar expressions are generally intended to identify
forward-looking statements. The projected results and statements
contained herein release that are not historical facts are based on
current expectations, speak only as of the date of these materials
and involve risks, uncertainties and other factors that may cause
actual results, performances or achievements to be materially
different from any future results, performances or achievements
expressed or implied by such projected results and statements.
Assumptions relating to the foregoing involve judgments with
respect to, among other things, future economic competitive and
market conditions and future business decisions, all of which are
difficult or impossible to predict accurately and many of which are
beyond the control of Trian.
The estimates, projections and potential impact of the
opportunities identified by Trian herein are based on assumptions
that Trian believes to be reasonable as of the date of this press
release, but there can be no assurance or guarantee (i) that any of
the proposed actions set forth in this press release will be
completed, (ii) that the actual results or performance of the
Company will not differ, and such differences may be material, or
(iii) that any of the assumptions provided in this press release
are accurate.
Important Information
Trian, together with certain other affiliates who are expected to
be participants (the “Participants”) in solicitation of
shareholders of the Company in connection with its 2023 annual
meeting of shareholders (the “2023 Annual Meeting”), intend
to file a definitive proxy statement and accompanying proxy card
with the Securities and Exchange Commission (the “SEC”) in
anticipation of such solicitation. Shareholders are advised to read
the definitive proxy statement and any other documents related to
the 2023 Annual Meeting when they become available because they
will contain important information.
Information about the Participants and a description of their
direct or indirect interests by security holdings will be contained in the preliminary
proxy statement to be filed by the Participants with the SEC on
January 12, 2023. This document is available free of charge on the
SEC website. The definitive proxy statement, when filed, and other
relevant documents, will also be available on
www.RestoreTheMagic.com and the SEC website, free of charge, and by
directing a request to Trian Partners’ proxy solicitor, Okapi
Partners LLC, 1212 Avenue of the Americas, 17th Floor New York, New
York 10036 (Shareholders can call toll-free: +1 (877)
629-6357).
Appendix A: Disney’s 10-Year Share Price Performance

Appendix B: Disney’s Total Shareholder Return (“TSR”)
Consistently Underperforms

Appendix C: Change in Financial Performance Since 2018

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