Disney receives endorsement from proxy advisory firm in board battle

WALT Disney on Monday (Mar 18) received a critical endorsement from a proxy advisory firm which can sway investor voting when Glass Lewis urged shareholders to re-elect all of the company’s directors.

The recommendation dealt a blow to Trian Fund Management and Blackwells Capital as the two hedge funds argue the company needs new blood in the boardroom to reinvigorate the entertainment giant.

Glass Lewis said recent earnings reports show Disney is making progress and that the two hedge funds have not proposed better ideas to improve operations.

“We believe investors would be best served endorsing the incumbent directors at this time,” the report, seen by Reuters, said.

The company’s most recent financial quarter serves as a “promising indication of Disney’s strengthening prospects” under CEO Bob Iger, with the company making strides to turn its streaming business profitable, changes made at the film studio – including parting ways with the president of the motion picture studio – and plans for a US$60 billion investment in parks over the next decade, the report said.

Even last year, when Disney’s stock price dropped, Glass Lewis said the company did not sit “idle”. It hired a new chief financial officer, rationalised portions of its portfolio, refreshed portions of its creative staff and appointed new board members.

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Disney’s board has 12 members and Trian put forward two candidates, while Blackwells proposed three candidates for the board. Neither Blackwells nor Trian had an immediate comment on the recommendation.

The tussle over who will serve on Disney’s board has been the most bitter and expensive of the season, with Trian saying the company has lost its creative engine and needs to do better in finding an executive to succeed CEO Bob Iger and Blackwells saying the company needs to harness technology better to dominate the media and entertainment space in the years ahead.

Disney has received powerful endorsements from another hedge fund, ValueAct Capital, and JPMorgan CEO Jamie Dimon, whose bank is defending the company against the hedge funds.

Glass Lewis and Institutional Shareholder Services (ISS), its bigger rival, often help investors decide how to vote in critical corporate elections. ISS has not yet issued its report.

Shareholders will vote at Disney’s annual meeting scheduled for Apr 3. REUTERS