Nelson Peltz Throws Cold Water On Disney As Proxy Battle Heats Up: 'Very Little Meat On The Bones'

Despite Walt Disney Co‘s DIS string of recent announcements that sent shares higher, activist investor Nelson Peltz still isn’t convinced management knows how to bring the magic back.

“They made these announcements like this management team just came into office about a week and a half ago,” Peltz told CNBC. “They have been here for 20 years.”

Peltz, who is CEO of Trian Partners, nominated two directors at Disney's 2024 annual meeting. The move is part of his ongoing proxy battle with the entertainment conglomerate.

“All of a sudden they’ve awakened and they want to start making all of these announcements? By the way, there’s very little meat on the bones of their announcements,” he said in an appearance on “Money Movers.”

Last month, Disney said it would not endorse any candidates nominated by activists and instead urged shareholders to support Disney’s own nominees. Peltz criticized Disney’s unwillingness to engage with his firm, noting that Trian is the company’s largest shareholder with close to 33 million shares.

Peltz’s main gripe is that Disney stock has underperformed the S&P 500 consistently for several years.

To turn things around, Disney should target higher margins, announce a CEO succession plan and align management pay with performance, Peltz insists.

Disney’s most recent earnings disclosed details on a $1.5 billion stake in Fortnite maker Epic Games. The Bob Iger-led company also plans to launch an ESPN streaming service in 2025.

For shareholders, Disney increased its dividend and announced a new share repurchase program.

“This reminds me of a politician making Election Day announcements,” Peltz said.

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Peltz praised the streaming deal Disney Plus struck with Taylor Swift’s Eras Tour film. However, he scrutinized other moves the company made, such as the Epic Games investment. After all, Disney has a limited track record in the video game space, he said.

Peltz also questioned whether Disney can afford to raise its dividend and introduce a new buyback right now. It’s a positive for shareholders on the surface, but Peltz argues it’s the wrong move in the long term.

“This company has spent over $200 billion since 2018. We’re cash flow negative, earnings are down, the balance sheet has been really injured,” he said.

Furthermore, as shareholder value has trended lower in recent years, management pay has continued to climb, he said: “That doesn’t work for me.”

Trian Partners sent a letter to shareholders this week reiterating the need for a refreshed board at Disney. The turnaround plans Disney laid out last year turned out to be a “fairy tale,” the firm said.

“With the stock waning and Disney facing another proxy contest, Disney appears to again be trying to distract shareholders with what we see as a fanciful tale,” Trian said in the letter.

Trian is again urging shareholders to elect Peltz and former Disney CFO Jay Rasulo to the company’s board. Disney's annual shareholder meeting is set to take place on April 3.

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DIS Price Action: Disney shares were up 0.33% at $110.82 Wednesday afternoon, according to Benzinga Pro.

Photo: Shutterstock.