Nelson Peltz's Trian Fund Management is moving ahead with a proxy fight against Disney (DIS) for more board seats. Disney announced in an SEC filing that Morgan Stanley CEO James Gorman and former Sky CEO Jeremy Darroch (CMCSA) will join its board early next year. Much of Peltz's push is aimed at Bob Iger's performance as CEO, who now finds himself in the middle of this fight.
Weinberg Center for Corporate Governance Founding Director Charles Elson joins Yahoo Finance to give insight into what Iger has to deal with and what it will mean for the company moving forward.
"It's a big one. In a proxy fight, you're going to have to travel all over the place, meet the large investors. They'll give proxy recommendations by the large proxy advisory services that you have to deal with and you're going to have to spend a lot of time and a lot of money on it..." Elson explains. "Which is why typically you try to avoid this at all costs because it's not just time away from your job, it's time spent on this, and usually it's going to be pretty negative. "
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JOSH LIPTON: Charles, how much of a distraction do you think this is for Iger? He already has plenty on his plate-- ESPN, streaming, linear TV. How much of a distraction is it, Charles, do you think?
CHARLES ELSON: Oh, it's a big one. I mean, in a proxy fight, you're going to have to travel all over the place meet the large investors. There'll be proxy recommendations by the large proxy advisory services that you have to deal with. And you're going to have to spend a lot of time and a lot of money on it. It's a big distraction, which is why, typically, you try to avoid this at all costs because it's not just time away from your job. It's time spent on this.
And usually, it's going to be pretty negative. I mean, Mr. Peltz is not going to say, you're doing a great job. I'm just here to give you support. He's saying, you're doing a lousy job, more or less. And I need to get in. And so you're on the defensive. And it takes time and attention away from attempting to turn around the business. But again, it's of the company's own doing. It's not Mr. Peltz's fault. It's the company that set up this performance issue/governance issue that attracted this. That's all.
JULIE HYMAN: And it's interesting that you mention it's not as though they're saying he's doing a great job because Eliot took another stake in another company this week, Phillips 66. And there, they actually praised the CEO. And it seems like a much more friendly endeavor there. There's been some reporting on that front that Peltz and Iger, that there's a personal element to all of this, which, is that then-- is there a risk that for shareholders that this is all going to turn south because there's sort of emotion in this?
CHARLES ELSON: There's always emotion in a proxy fight. You never like the other person or agree with the other person, and they don't particularly like you. That's why you got into a proxy fight. If you got along, they would invite you on the board, which didn't happen here. Peltz has had many successes. He's had a few non-successes. But again, the ingredients are all here.
And again, this is a company that's had governance disputes for many, many years. This goes all the way back to Michael Eisner. And so it's not as though you say Disney, and people think, oh, good governance. You say Disney, and people think Eisner, et cetera, et cetera, et cetera. And it's just the brand name, Disney, which is great for movies, and the governance biz sometimes signals governance that causes concern. And that's the problem that Mr. Iger has.
JOSH LIPTON: All right, a story we're going to keep following closely. Charles Elson, thank you for joining us today.
CHARLES ELSON: Thank you. Good to be with y'all.