Disney’s Board of Directors should be facing the end of its happily ever after.
This Wednesday, the directors of the most recognizable name in media are facing replacements courtesy of activist shareholder Nelson Peltz of Trian Fund Management, who’s looking to unseat multiple board members in favor of himself and former Disney CFO Jay Rasulo. Peltz’s bid for a board seat is hardly a grassroots move—major proxy advisory firms like ISS and Egan-Jones are backing Peltz as a needed shareholder voice on the company’s board. The final vote count, revealed at Disney’s annual meeting on April 3rd, will determine the trajectory of the company for the foreseeable future. But why does it matter? How did Disney mess up so badly?
The answer, perhaps unsurprisingly, is political. Disney didn’t fall into the political limelight by accident. They walked into it willingly—and it wasn’t just them: 2023 highlighted how many major corporations, from Bud Light to Target, were willing to sacrifice gains on this hill. But it’s difficult to overstate how heavily Disney in particular leaned into ESG. The company’s executive producer Latoya Raveneau has celebrated the company’s openness to her ‘not-at-all-secret gay agenda,’ a move that, intentionally or otherwise, shredded Disney’s credibility with conservative and center-right customer, thus harming shareholders. Policy-wise, Disney pushed back on Florida laws banning discussion of gender and sexuality in the classroom, only furthering its perception as an expressly political entity. The politicization of the Disney empire has become so blatant that the company lost its special tax status in a fight against Florida lawmakers.
And that’s the real kicker in the whole new terrible world Disney’s chosen to create: the new political Disney struggles with the ostensibly important skill of actually making money. As our firm Bowyer Research notes, far from creating value, Disney’s actions have destroyed value for its shareholders. Company stock has fallen by 16 percent over the past five years. Our research shows Disney as the worst-performing company in its media peer group and losing out big-time to brands like Netflix, last year, sinking so low that their stock values are now only slightly higher than during the worst slump of COVID-19.
The company’s brand value similarly tanked by almost $3 billion dollars falling to 29th place during 2023.
The true victim’s of Disney’s political activism are its shareholders. As Peltz notes, shareholders have lost $70 billion in the past year, creating opportunities for not only widespread criticism from leading CEOs like Elon Musk but open, and seemingly persuasive, attempts to remake Disney’s board in a more shareholder-friendly image. In this case, more shareholder-friendly may mean simple things like growing company value and eschewing the kind of political activism that alienates half, if not more, of Disney shareholders.
Disney, and CEO Bob Iger, have no one to blame for this debacle but themselves. Their actions are a picture-perfect case study of the negative relationship between corporate political activism and shareholder value—and it’s why Bowyer Research Proxy Guidelines call for a vote of no against Disney’s current board.
The biggest name in media has made its activist stance clear: Disney cannot—and will not—prioritize its shareholders. It’s time for shareholders to take them at their word.
