Walt Disney Co DIS is in the midst of a proxy battle with activist investor Nelson Peltz, who isn't convinced Disney’s management team knows how to bring the magic back to shareholders.
On the other hand, Morgan Stanley executive chair and newest Disney board member James Gorman believes the turnaround at Disney is well underway, as evidenced by the stock price.
What To Know: Disney shares are up more than 30% since the start of the year, but the stock is well off its highs from 2021 and has traded essentially flat over the last five years.
Peltz, who is the CEO of Trian Partners, has argued that the longer-term performance of the stock is unacceptable. In an effort to turn things around, he has nominated himself and former Disney CFO Jay Rasulo to the company's board.
Disney said it would not endorse any candidates nominated by activists and instead urged shareholders to support its own board nominees. Shareholders will get to vote at Disney’s annual meeting on April 3.
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Why It Matters: Gorman, who joined Disney’s board in November, believed the turnaround at Disney is already in progress.
“The focus is on what’s right for Disney at this point in time,” Gorman said Tuesday on CNBC’s “Squawk On The Street.”
When he was asked about the underperformance of Disney stock, he highlighted the stock price appreciation since the start of the year as evidence of the turnaround.
“I think that’s pretty backward-looking. Look at year-to-date, I think the stock’s up 29%, 30% … so you’ve got to see things through the fullness of time,” Gorman said.
The COVID-19 pandemic was a tough period for media companies, especially Disney given its parks exposure. At the same time, the legacy media business was going through a transition period as consumers left cable for streaming. Disney stock underperformed the S&P 500 in the years that followed, but that’s understandable when looking at the circumstances, Gorman said.
“There was clearly a period of major disruption in this industry and I think what Bob [Iger] and the team are doing is obviously turning that around, as evidenced in the performance of the stock,” he noted.
Gorman expressed confidence in Iger and board chair Mark Parker’s ability to do what is best for Disney and its shareholders moving forward. The key is to move forward and plan for the future, he said, adding that Peltz seemed more focused on the past.
“A lot of his fight seems to be looking backwards. I’m more interested, and why I joined the board, is in looking forwards,” Gorman said.
DIS Price Action: Disney shares were down 0.067% at $119.29 at the time of publication Tuesday, according to Benzinga Pro.
Photo: Shutterstock.
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