Dan Coatsworth, investment analyst at AJ Bell, comments on the outcome of The Walt Disney Company’s annual shareholder meeting:
“Disney shareholders have spoken – the majority don’t want an activist investor fiddling with the House of Mouse and Nelson Peltz has not been given a seat at the table.
“The drop in the share price on the news would suggest the market is disappointed, with certain investors having hoped that Peltz would drive big changes to the business.
“However, the 50%-plus rally in the shares in the six months leading up to the proxy vote tells a different story. That suggests plenty of investors have been happy with Bob Iger’s actions to fix Disney and that, in Peltz’s words, ‘throwing spaghetti against the wall’ actually hit the right spots.
“Disney’s first quarter results painted a picture of a company regaining its mojo. It is seeing cost reductions, earnings are growing, it expects to make its combined streaming businesses profitable by the end of the financial year, shareholders are getting a big hike in the dividends, it is turbocharging growth in parks and experiences and it is trying to reinvigorate the film studio. Peltz’s grumbles might have encouraged Iger to act but the incumbent boss is almost certainly going to take all the credit.
“Where does Peltz go from here? Activists can be stubborn at the best of times and can dig their heels into the ground until they get what they want. Peltz’s reputation is at stake after the defeat and he may ratchet up the pressure on Disney by slating the company publicly even more than before.
“Iger now has a window by which to execute his recovery plan but failure to produce the desired results within the next 12 months could see investors switch allegiance. This is Iger’s last chance to win otherwise Peltz will be back and demanding a lot more.”