The Trian Group,1 which beneficially owns $3.5 billion of common
stock in The Walt Disney Company (NYSE: DIS), today released a
letter to its fellow Disney shareholders. The full text of the
letter is below and available to view online at:
https://restorethemagic.com/03-18-2024/.
Dear Fellow Walt Disney Company Shareholder:
Disney’s 2024 Annual Meeting will be held on April 3, and it is
time for you to vote to help Restore the Magic at
Disney.
For more than a century, Disney has captivated millions of
people all over the world with unforgettable films and experiences.
Like you, Trian loves Disney and wants to see the Company succeed.
With its iconic franchises, global presence and scale, unparalleled
customer loyalty and enviable commercial flywheel, Disney and its
shareholders should prosper.
But despite its many advantages, Disney has lost its way. Disney
fell from its #1 position at the box office,2 was late to enter the
streaming business3 and doubled down on linear TV at the wrong
time.4 As a result, financial performance has deteriorated, with
earnings per share, free cash flow, operating income and many other
key metrics lower than they were five years ago.5
Consequently, shareholders have suffered. Disney’s stock has
underperformed its media peers and the broader market over most
relevant periods: over the past one, two, three, four and five
years.6
Change Is Needed
To help ensure a better future for this great company, we
believe Disney needs new independent directors who have a
shareholder mindset, deep and relevant experience and a sense of
urgency.
We have nominated two such candidates: Nelson
Peltz and Jay Rasulo, each of whom have
invested their own money in Disney stock and are dedicated to
helping Disney. Nelson was a public company CEO and has served on
the boards of many public companies facing performance, governance
and CEO succession challenges, just like Disney. Jay is the former
Chief Financial Officer of Disney and ran the Company’s parks and
resorts business before that.
Nelson and Jay pledge to work together with the other members of
the Board and Disney’s leadership team to enhance corporate
governance and accountability, accelerate media profitability,
review Disney’s creative engine and clarify the Company’s strategic
focus. We believe Nelson and Jay will be a catalyst for much needed
positive change.
We are seeking to replace two long-serving Disney directors
whose backgrounds and skills are not, in our view, relevant to
Disney’s current challenges or likely to assist in its turnaround:
Michael B.G. Froman and Maria Elena Lagomasino. Mr. Froman is
President of the Council on Foreign Relations (where another Disney
director is on the board) and Ms. Lagomasino helps organize the
affairs of wealthy families. Whatever their strengths and skills in
foreign affairs and wealth management, the cold truth is that
neither of them has helped Disney retain its leadership position in
the media landscape; neither of them has aligned executive pay with
performance;7 and neither of them has facilitated an orderly CEO
transition.8 Instead, under their watch, Disney has fallen – its
fundamental financial performance is worse,9 and its stock has
underperformed.10
Disney can do better. But it needs some fresh
thinking.
We Have Helped Drive Change
At Trian, we have recommended and nominated directors at more
than two dozen companies over the course of our history. Nelson
Peltz has served on 11 public company boards himself and is one of
the most experienced corporate directors in America. Time and
again, Nelson and our other candidates have proven to be productive
and collaborative directors; they have overseen major business
transformations11 and successful leadership transitions12 and have
helped drive growth13 and create value14 for all shareholders.
The simple fact is that Trian suggests candidates for boards in
an effort to help, and our candidates focus their energy entirely
on trying to create value for shareholders. Our fresh perspective
and shareholder mindset, coupled with a genuine dedication to
collegiality and collaboration, and long-term focus are a powerful
combination. Great companies that have lost their way – like Disney
– often thrive after new directors, nominated by Trian, are
appointed.15
Just ask the companies themselves: executives at Mondelēz, Sysco
and Wendy’s, for example, have praised our directors for working
constructively in the boardroom.16 Even CEOs of companies that
initially opposed the appointment of Mr. Peltz – Heinz, DuPont and
Procter & Gamble – later commended him as constructive and
collaborative.17
Accepting Change is Hard
Admittedly, our relationships with companies, and with other
directors, do not always start with such positive feelings.
Sometimes to deflect from performance issues, corporate boards
attempt to sow uncertainty about Trian and our candidates, warning
that we will be “disruptive” or that our candidates will “not add
value.”18
Disney has taken this approach to an extreme. Disney’s Board has
claimed that the election of Nelson and Jay threatens to
“impede,”19 “disrupt”20 and “derail”21 the Company’s supposed
progress. They have disingenuously touted “endorsements” from
“experts”22 who are, in fact, just service providers or advisors to
Disney that have been highly compensated by the Company. Disney has
used inflammatory rhetoric, claiming that our candidates (one of
whom is Disney’s own former CFO) are “oblivious”23 and that our
ideas are “inane.”24
We have been here before.
We know that companies sometimes fear and resist change. But we
also know that turnarounds are not easy and often require objective
thinking and new ideas.
To Disney’s incumbent directors, we say this: we are not here to
upset, interrupt or reverse Disney’s progress, or frustrate the
Board or leadership team. We love Disney; we are a large
investor and we come with the sole purpose of helping the Company
get back to delighting consumers and delivering strong returns for
shareholders. We look forward to the opportunity to do so
together, with you, from inside the boardroom.
Vote for Change
Nelson Peltz and Jay Rasulo have dedicated themselves to helping
build a better future for this iconic company. Like you, we want
Disney to improve the guest experience at its parks and on its
cruises; create unforgettable, industry-leading films and
television content; and deliver sustainable growth and value for
shareholders for generations to come.
We are confident that, given its many advantages, Disney can do
better. But we need your help.
Together, we can elect two new independent directors who will
bring focus, alignment and accountability to the Company’s
boardroom. Together, we can Restore the Magic at
Disney.
To ensure the election of Nelson Peltz and Jay Rasulo,
it is essential that shareholders vote
FOR Nelson Peltz and Jay Rasulo
and WITHHOLD on Michael B.G.
Froman, Maria Elena Lagomasino and all three Blackwells Nominees.
Please use the enclosed BLUE proxy card.
P.S. If you voted already, it is not too late to switch your
vote and support Trian’s Nominees, Nelson Peltz and Jay Rasulo.
Your last vote is the one that counts.
For more information, please visit www.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 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) 451-3030atarbell@trianpartners.com
Paul Caminiti / Pamela Greene / Jacqueline ZuhseReevemark(212)
433-4600Trian@reevemark.com
Investor Contacts:
Matthew Peltz(212) 451-3060mpeltz@trianpartners.com
Ryan Bunch(212) 451-3176rbunch@trianpartners.com
Bruce Goldfarb / Pat McHughOkapi Partners LLC(212) 297-0720(877)
629-6357info@okapipartners.com
Edward McCarthy / Richard Grubaugh / Thomas GerminarioD.F. King
& Co., Inc. (212) 229-2634 Disney@dfking.com
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 Walt Disney Company (“Disney” or 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, except as required by law. 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, investment vehicles, and accounts managed by Trian currently
beneficially own shares of the Company. These funds, investment
vehicles, and accounts 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 necessarily
depend on future events are forward-looking, and the words
“anticipate,” “believe,” “expect,” “potential,” “could,”
“opportunity,” “estimate,” “plan,” “once again,” “achieve,” and
similar expressions are generally intended to identify
forward-looking statements. The projected results and statements
contained herein 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.
Trian has neither sought nor obtained the
consent from any third party to use any statements or information
contained herein that have been obtained or derived from statements
made or published by such third parties, nor has it paid for any
such statements. Any such statements or information should not be
viewed as indicating the support of such third parties for the
views expressed herein. Trian does not endorse third-party
estimates or research which are used herein solely for illustrative
purposes.
Important Information
Trian Fund Management, L.P., together with
Nelson Peltz, Peter W. May, Josh Frank, Matthew Peltz, Isaac
Perlmutter, James A. Rasulo, Trian Fund Management GP, LLC, Trian
Partners, L.P., Trian Partners Parallel Fund I, L.P., Trian
Partners Master Fund, L.P., Trian Partners Co-Investment
Opportunities Fund, Ltd., Trian Partners Fund (Sub)-G, L.P., Trian
Partners Strategic Investment Fund-N, L.P., Trian Partners
Strategic Fund-G II, L.P., Trian Partners Strategic Fund-K, L.P.,
The Laura & Isaac Perlmutter Foundation Inc., Object Trading
Corp., Isaac Perlmutter T.A., and Zib Inc. (collectively, the
“Participants”) filed a definitive proxy statement and accompanying
form of blue proxy card (as supplemented and amended on February
12, 2024, the “Definitive Proxy Statement”) with the Securities and
Exchange Commission (the “SEC”) on February 1, 2024 to be used in
connection with the 2024 annual meeting of shareholders of the
Company.
THE PARTICIPANTS STRONGLY ADVISE ALL
SHAREHOLDERS OF THE COMPANY TO READ THE DEFINITIVE PROXY STATEMENT
AND OTHER PROXY MATERIALS BECAUSE THEY CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS ARE AVAILABLE AT NO CHARGE ON THE
SEC’S WEBSITE AT HTTP://WWW.SEC.GOV AND TRIAN’S WEBSITE,
HTTPS://RESTORETHEMAGIC.COM. THE DEFINITIVE PROXY STATEMENT AND
ACCOMPANYING PROXY CARD WILL BE FURNISHED TO SOME OR ALL OF THE
COMPANY’S SHAREHOLDERS. SHAREHOLDERS MAY ALSO DIRECT A REQUEST TO
EITHER OF TRIAN’S PROXY SOLICITORS, OKAPI PARTNERS LLC, 1212 AVENUE
OF THE AMERICAS, NEW YORK, NY 10036 (SHAREHOLDERS CAN E-MAIL
INFO@OKAPIPARTNERS.COM OR CALL TOLL-FREE: (877) 629-6357), OR D.F.
KING & CO., INC., 48 WALL STREET, NEW YORK, NY 10005
(SHAREHOLDERS CAN E-MAIL DISNEY@DFKING.COM OR CALL TOLL-FREE: (800)
207-3158).
Information about the Participants and a
description of their direct or indirect interests by security
holdings or otherwise can be found in the Definitive Proxy
Statement.
_______________1 Please refer to the definitive proxy statement,
filed with the United States Securities and Exchange Commission by
Trian Fund Management L.P. and certain of its affiliates and
other persons (the “Definitive Proxy Statement”) for information
regarding the members of the “Trian Group.” Nelson Peltz
beneficially owns Disney shares worth approximately $3.5 billion
and Jay Rasulo owns Disney shares worth approximately $800,000, in
each case as further detailed in the Definitive Proxy Statement.
Note that ownership position values are based on Disney’s share
price at the close of business on March 15, 2024.2 Trian
presentation, filed with the Securities and Exchange Commission on
03/04/24 (“Trian’s White Paper”) at page 106.3 Id. at page 30.4 Id.
at pages 58-60.5 Id. at page 9.6 FactSet. Note: Disney performance
measures total shareholder return (“TSR”) through 03/15/24 defined
as the total return an investor would have received if they
purchased one share of stock on the first day of the measured
period, inclusive of share price appreciation and dividends paid.
“Media Peers” represents the simple average of “Media Industry
Peers” as defined in Disney’s 2024 Definitive Proxy Statement and
consists of Alphabet, Amazon, Apple, Comcast, Meta, Netflix,
Paramount, and Warner Bros. Discovery; “Broader Market” represents
the S&P 500 which we highlight here only as a widely recognized
index, however, for various reasons the performance of the index
and that of the securities mentioned above may not be comparable.
One cannot invest directly in an index.7 Since Ms. Lagomasino
became Chair of Disney’s Compensation Committee, Disney’s
say-on-pay votes have averaged just 73%, which ranks in the bottom
10% of all S&P 500 companies and Disney’s say-on-pay approval
percentages have been below the S&P 500 median every year.
Say-on-pay has also been below the average of all of the S&P
500 companies since 2018, which is Mr. Froman’s tenure on the
Board.8 Trian’s White Paper at page 64.9 Trian’s White Paper at
page 9.10 FactSet. Disney’s stock has underperformed Media Peers
and the Broader Market over one, three and five years. See supra n.
6.11 At The Procter & Gamble Company (“P&G”), a household
products company where Mr. Peltz served on the Board from 2018
until 2022, he helped P&G develop and oversee a “Four-Year
Overhaul” that resulted in P&G “making several dramatic changes
to help improve performance” and “streamlin[ing] its operations
from 10 business units to six, improv[ing] its earnings growth,
clear[ing] out bureaucracy and increas[ing] accountability.”
(Source: Article titled “Peltz to Depart P&G Board, Capping
Nearly Four-Year Overhaul,” published August 5, 2021 by
Bloomberg.)12 Nelson Peltz has assisted six different boards with
executing on successful succession plans since 2016: Unilever
(2023), Janus Henderson (2022), P&G (2021), Sysco (2020),
Mondelēz (2017) and Wendy’s (2016 and 2024).13 At Mondelēz
International, an international snack company, during Mr. Peltz’s
tenure on the board of directors from 2014 to 2018, the company
improved its cash flow generation through margin improvement and
development of working capital efficiencies. (Source: SEC filings.
In 2014, operating income margins were 11.7% and improved to 16.7%
in 2018. Cash flow from operations were $3.56 billion in 2014 and
improved to $3.95 billion in 2018.)14 At Trian portfolio companies
where Nelson Peltz has served on the board, those companies have
delivered an average annualized TSR of 17%, from the first day
Trian invested through 12/31/23 (or through a company’s sale date
related to an acquisition), outperforming the S&P 500 by more
than 500 bps and representing a 1600 bps improvement from the
five-year period prior to Trian’s involvement. This TSR information
does not represent, and should not be construed as describing, the
performance of any funds, investment vehicles or accounts managed
by Trian. Past TSR performance is not indicative of future TSR
performance. Although Trian believes that the changes or
improvements for certain companies identified herein were
attributable in significant part to the cumulative effects of the
implementation of operational and strategic initiatives during the
period of Nelson and Trian’s active involvement, there is no
objective method to confirm what portion of such growth was
attributable to Nelson and Trian’s efforts and what may have been
attributable to other factors.15 Id.16 See the “Third Party
Perspectives” page of the Trian Group’s website,
www.RestoreTheMagic.com, for a list of quotes from select former
directors and executives with whom Trian’s partners have served on
a public company board.17 Id.18 P&G Letter to Shareholders,
08/01/17.19 Disney Letter to Shareholders, 02/12/24.20 Disney
Letter to Shareholders, 02/26/24.21 Disney Letter to Shareholders,
02/12/24.22 See the “Expert Analysis” page of Disney’s campaign
website, which includes supportive quotes from Jamie Dimon, the CEO
of JPMorgan Chase, and Mason Morfit, the CEO of ValueAct Capital.
According to the Financial Times, JPMorgan Chase has received more
than $150 million in fees from Disney since 2014. See also
Blackwells Capital Investor Presentation, 03/11/24 (estimating that
ValueAct has earned more than $90 million in fees from managing
assets for Disney’s pension funds).23 Disney presentation filed
with the SEC on 03/11/24 at page 42.24 Id. at page 4.
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