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Disney faces power of attorney battle for activist investor Nelson Peltz

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Activist investor Nelson Peltz wants a seat on Walt Disney’s board, saying he wants to “restore the magic” to the entertainment and media company.

Peltz’s Trian Group filed a preliminary proxy statement on Thursday with the Securities and Exchange Commission seeking the position after announcing its intentions on Wednesday.

Peltz said in Trian’s press release that Disney has lost its way in recent years, “resulting in a rapid deterioration in its financial performance from a consistent dividend paying business and generating high free cash flow to a highly leveraged company with reduced earning power and poor free cash flow conversion.”

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Nelson Peltz

Nelson Peltz, founding partner of Trian Fund Management, speaks at the WSJD Live conference in Laguna Beach, Calif., Oct. 25, 2016. (Reuters/Mike Blake/Reuters Photos)

In a presentation accompanying the securities filing, Trian noted that Disney’s total shareholder return has “significantly underperformed” the S&P 500 and proxy peers over one-, three-, five- and 10-year periods.

“We believe that current Disney investor sentiment is low, reflecting the harsh truth that Disney is a company in crisis and faces many challenges that weigh on the company’s investment prospects,” the presentation said.

Disney shares have fallen by more than a third in a one-year period. The S&P 500 is down by half, just over 15%.

ticker Safety Last Change Change %
DIS WALT DISNEY CO. 99.82 +3.50 +3.63%

“As a highly engaged shareholder serving on the Disney 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, increased shareholder value and a robust asset planning process. succession that will set the stage for long-term sustainable growth,” he added.

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disney answer

Disney Bob Iger

Trian Fund Management believes that the Walt Disney Company has lost its way under current leader Bob Iger. (Charley Gallay/Getty Images for Disney/Getty Images)

On Wednesday, Disney announced that Mark Parker, a seven-year board member and executive chairman of Nike, would become the new chairman.

In the announcement, former board leader Susan E. Arnold said, “During his four decades at Nike, Mark has led one of the world’s most recognizable consumer brands through multiple market evolutions and a successful CEO transition.”

“He is uniquely positioned to chair the Disney Board during this transformational period,” she added.

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The Trian and Disney connection

Magic Kingdom Disney World

Cinderella’s Castle at the Magic Kingdom at Walt Disney World. (Fox News Digital / Fox News)

Trian currently owns approximately 9.4 million shares of Disney common stock, a company valued at approximately $900 million.

Despite Disney’s significant advantages, recent share price and operating performance have been disappointing, Trian said in his Jan. 11 statement.

The entertainment giant’s stock is currently trading near an eight-year low, despite the company’s recent decision to rehire Bob Iger as CEO, Trian said.

The investor noted that adjusted earnings per share are down 50% since fiscal 2018.

The dispute with Disney could be Peltz’s biggest proxy battle since a bitter struggle to win a board seat at P&G, maker of Tide detergent. During his more than three-year tenure on the P&G board, the company’s stock price rose nearly 80%.

Disney also faced pressure from Third Point’s Daniel Loeb to spin off cable sports channel ESPN, update its board and buy Comcast’s stake in Hulu, which has about 46 million subscribers.

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Walt Disney did not immediately respond to questions from FOX Business.

Reuters contributed to this report.