The Walt Disney Company (DIS) Proxy Contest With Trian and Blackwells

ISS SPECIAL SITUATIO NS RESEARCH
ANALYSIS
March 21, 2024
THE WALT DISNEY COMP ANY (DIS): Record Date Feb. 5, 2024
Meeting Date April 3, 2024
PROXY CONTEST WITH TRIAN AND BLACKWELLS CONTENTS
Executive Summary 1
VOTE RECOMMENDATION: VOTE FOR PELTZ ON T HE Total Shareholder Return & Historical Performance 6
TRIAN CARD Shareholder Base 9
Background and Key Events 10
Executive Summary departs, and in doing so, avoid future Dissident Critique/Board Response 13
mutinies. 1. Is Change Warranted? 20
After pausing its campaign in 2023, Trian is
*** 2. Which Nominees? 30
back this year seeking two seats on the 12-
member Disney board. Another activist fund, Conclusion and Vote Recommendation 33
In analyzing proxy contests, ISS focuses on
Blackwells, has nominated three candidates two central questions: CHART FOCUS: DIS SHA RE PRICE
of its own. The board, which reached an $120
1. Have the dissidents made a compelling Oct. 8, 2023
agreement with yet another investor,
case that change is warranted? WSJ reports that Peltz will
ValueAct, points to improved results now
that Bob Iger is back at the helm as evidence 2. If so, which nominees are most likely to $100 launch new campaign
that shareholder intervention is unnecessary drive that change?
and unwelcome. QUESTION 1: IS CHANGE WARRANTED? $80 Feb. 7, 2024
The fact that Disney's ship was taking on DIS reports
DIS has faced multiple operational challenges
water is obvious. Iger's return may have been quarterly
over the past several years. The media $60 Nov. 8, 2023
sufficient to plug the holes, and management earnings
industry has been undergoing a long-term DIS reports
has since taken several actions to plot a
secular shift away from cable television into quarterly
better course. With any luck, the favorable streaming, a trend accelerated during the
$40
winds of renewed cinematic success should earnings
pandemic. The company has also faced
convince shareholders that Disney is again numerous pandemic-related obstacles, which $20
headed for safer ports. What remains missing
negatively affected all parts of its business,
is tangible progress towards succession to
including park closures and constraints after
give investors sufficient confidence that the $0
reopening, suspension of sports events,
company will not run aground after Iger Mar '23 Mar '24
Source: Bloomberg
CONTACTS
Special Situations Research delivers comprehensive, independent research on high-profile economic proposals
Nina Aicardi, CFA Cristiano Guerra
including M&A and proxy contests, and on the implications for shareholders of evolving trends in corporate
Nina.Aicardi@issgovernance.com Cristiano.Guerra@issgovernance.com
governance and shareholder rights.
Copyright © 2024 Institutional Shareholder Services Inc. and/or its subsidiaries (“ISS STOXX”). All rights reserved. David Spindler
David.Spindler@issgovernance.com
March 21, 2024
production delays, and a drop in attendance at Chapek's and its own strategic mistakes. the board's own assessment) that a more engaged
movie theaters, among others. Nevertheless, as a board should arguably have recognized these issues
Since Iger's return as CEO, a number of initiatives
global diversified business, DIS should have had the sooner. Several of Chapek's major decisions –
have been announced to address some of the
ability to maintain stability in its financial including expanding streaming content at the cost of
operational challenges over the prior five years and
performance through disruptions. Despite this diluting quality, severing the bridge between artistic
reverse some of the decisions and actions taken
advantage, DIS has significantly underperformed the and financial decisions (including the hiring of 3,700
during Chapek's CEO tenure. Although shares
S&P 500 over the one-, three-, and five-year periods new heads in the process), and failing to effectively
continued to underperform initially after Iger's
through Oct. 6, 2023, the last trading day before The navigate the political controversy in Florida – have
return, over the past approximately six months, DIS
Wall Street Journal reported that Trian was preparing been criticized by Iger, who has reversed many of
shares have rallied by over 30 percent, including
to run a proxy fight at the 2024 AGM. DIS' them. When asked about Chapek's decisions during
6.9 percent and 11.5 percent one-day moves
performance relative to its peer group is better than engagement with ISS, the board repeatedly stated
following the releases of 4Q FY23 and 1Q FY24
relative to S&P, but still shows underperformance in that it spotted "red flags" along the way, and that
earnings, respectively. Iger's turnaround plan, while
the five- and one-year periods through the Chapek even failed to heed direct advice from the
somewhat scant on specific guidance, may have
unaffected date. board. Ultimately, the board fired Chapek despite
reassured investors that these challenges are being
having renewed his contract only five months before.
Operational performance over the past five years addressed.
Although the board believes it took swift action when
shows deterioration in margins, free cash flow, and
Nevertheless, the key decision points that led to needed, many investors feel that such action was
return metrics, as well as increased leverage. The
the company's challenges over the past five years, overdue, and perhaps could have been avoided
business challenges and trends identified by ISS
not to mention multiple activist campaigns, can be altogether had the board conducted more robust
analysis have been widely covered by the financial
traced to the board. The most obvious of these was due diligence.
press and have been highlighted by both dissidents.
the failed succession in 2020, for which the board
Those include the acknowledgment that financially By definition, the decision to ask a former CEO
admittedly did not follow the process it has
the Fox acquisition was value destructive, that the (especially one who indicated it was time for him to
outlined for the current succession strategy. How
secular decline in linear networks is an ongoing retire) to return to the company to replace a
the board became comfortable with Chapek, who
challenge that needs to be addressed, that the costs successor whom the board did not adequately vet is
by all accounts lacked the creative vision that
within DTC got out of control, that the studio evidence of a critically flawed succession process. In
seems so integral to success at DIS, is puzzling;
business has underperformed relative to the decade DIS' case, shareholders paid a steep price. The board
ultimately, the obvious conclusion is that the board
prior to the pandemic, that Parks and Experiences may argue that Iger was the only logical choice to
simply trusted Iger's judgment without conducting
has been a bright spot in earnings and requires lead the turnaround; this is a valid point, but one has
more rigorous due diligence.
ongoing investments to maintain its strength, and to wonder where the company would be had Iger not
the challenge of transitioning ESPN to DTC to address Hindsight is undoubtedly 20/20, and the market's been available, or willing, to return.
secular decline in linear networks. While some of the decision to overly reward streaming customer
Individually, all members of the DIS board are highly
challenges have been driven by industry disruption, growth at the beginning of the pandemic may have
accomplished individuals with relevant experiences
as well as the pandemic and its aftereffects, some muddied the waters by temporarily boosting the
and business insights. Yet, collectively, the board fell
appear to be self-inflicted. Many of the decisions stock price as Chapek led the company out of the
short on two key matters: cultivating a successor to
taken during Chapek's tenure as CEO in particular are pandemic. Yet, Chapek seems to have taken
Iger, and preventing Chapek from veering off course
now acknowledged by the board to have been enough wrong turns during his tenure (at least by
after he was appointed. Therefore, the question for
Copyright © 2024 Institutional Shareholder Services Inc. and/or its subsidiaries (“ISS STOXX”). All rights reserved.
March 21, 2024
shareholders is not whether the CEO should be characterized as a celebrity thanks to his successful During the course of its campaign, Blackwells
replaced, but whether the board, having failed to track record at this company, the glamor dedicated an entire investor presentation to
properly oversee the last succession process, is associated with the job, and his own published questioning ValueAct's agreement with DIS. In
capable of avoiding the same mistakes. Equally autobiography. Trian and Blackwells, which are response to an inquiry from ISS regarding Blackwells’
important is the question of whether the board, both nominating candidates at the 2024 AGM, as allegations, ValueAct has clarified that it no longer
which includes several CEOs of companies well as ValueAct, which reached an information manages assets on behalf of the DIS pension, and
undergoing their own periods of delicate transition, sharing agreement, have been active in the press that the DIS pension plan fully redeemed its
can oversee the next CEO more closely, and provide and at investor events. Both DIS and Trian have investment before ValueAct built its stake in the
more detailed and explicit guidance to prevent her received public endorsements from other business company. This is consistent with the board's
from making mistakes as costly as Chapek's. world celebrities. DIS has received public indication, during engagement with ISS, that DIS'
endorsements from the grandchildren of Walt and pension plan has recently moved away from actively
The decision to bring Iger back was the right one
Roy Disney, from Jamie Dimon, and from George managed (including Trian) to passive funds. ValueAct
given his track record, as well as investors'
Lucas, with all parties specifically endorsing Iger also indicated that although its investment team met
confidence in his understanding of the business and
although he is not targeted by any of the activists. with Bob Iger on very limited occasions in the years
decision-making related to company strategy. Some
Trian's campaign has received public support from prior to its investment in DIS, Mason Morfit and Bob
of the initiatives he undertook have already driven
Elon Musk and activist fund Ancora. Iger do not have a personal relationship.
an improvement in financial performance, and the
recent announcements appear to have driven an While investors need to consider each of the five Of note, Blackwells' confidence in the value that
improvement in investor expectations and dissident candidates on the universal card (two could be unlocked at DIS does not seem to have
sentiment. While it is clear that Iger is the right CEO from Trian and three from Blackwells), the translated into a substantial investment in the
for DIS at the moment, there are lingering questions campaigns run by each activist, as well as the company, despite the fact that some of the initiatives
about the board's ability to properly oversee the presence of ValueAct, provide some context it suggests carry a certain degree of risk, such as the
next CEO transition, whether it happens in 2026 or in narrowing down the choices. real estate separation. In the backdrop of all this,
later years, and the significant strategic changes the Blackwells has reportedly planned a campaign
Blackwells Campaign
company is undertaking, particularly given the targeting Wendy's – whose board includes three
ongoing challenging industry environment. The The fact that four activist funds have engaged the members of Trian. These inconsistencies make it
importance of executing a successful succession company in recent years is proof that DIS has faced hard to ascertain Blackwells' precise intention with
plan, particularly for a company of this complexity, obvious difficulties on multiple fronts, and over a this campaign.
and the board's prior failure to properly oversee this prolonged period. Blackwells’ decision to launch a
Ultimately, Blackwells’ critique mirrors Trian's in
process, suggests that some level of change at the parallel contest is not entirely surprising, though its
several regards. During our discussions with the
board level is warranted. campaign has followed an inconsistent arc, starting
board, it also became apparent that the company
with its criticism of Trian's campaign, followed by
Considerations Relating to a Multi-Activist Hollywood has in fact adequately considered many of the areas
comments largely interpreted as supportive of the
Campaign of improvement suggested by Blackwells. In light of
DIS board. Blackwells then pivoted to calling out
these factors, along the inconsistencies noted above,
This is an unusual contest in that it involves an iconic the lack of specific expertise on the board, and
our analysis focuses primarily on Trian's case for
global company, closely scrutinized and widely nominating three candidates, outnumbering Trian's
change.
covered by media, and a CEO who can be own effort by one candidate.
March 21, 2024
Blackwells has nonetheless nominated candidates In this regard, it seems that DIS may have missed makes it difficult to fully fault DIS for its defensive
that deserve consideration. As a result of the the opportunity to put this contest to rest by not posture.
universal proxy card, investors are able to support bringing ValueAct's Morfit onto the board in Absent direct shareholder representation on the
candidates from any slate, regardless of whose case advance of this AGM. ValueAct has a comparable
for change they find most compelling. board and presented with a dissident campaign that
investment in DIS to Trian, and Morfit has public has generated some controversy, shareholders must
QUESTION 2: WHICH NOMINEES? board experience in media and tech, including with necessarily assess the available candidates to
succession processes. Though the defensive determine whether the addition of a dissident
The above analysis suggests that incremental change appointment of a more "collaborative" activist in nominee would be a net positive.
is needed at the company due to multi-year advance of a contest is not always a compelling fix,
underperformance of the company's peers and in this case it might have been a useful tactic. In ISS' engagement, dissident nominee Rasulo came
chosen benchmark, operational challenges, and most Should the company defeat Trian at the polls, the across as levelheaded and demonstrated no sign of
critically, a repeated failure on the part of the board vote results could still inform the board’s view as to resentment or ill will towards Iger; he has also never
to oversee the cultivation of a successor to Iger. whether direct shareholder representation should worked with the current board members. His
be reconsidered down the line. knowledge of DIS' operations, though perhaps dated,
The board comprises well-qualified and
still appears to serve as a solid basis for
accomplished directors, does not lack a key skill set, Trian represents significant share ownership and understanding the company's current situation.
and, as highlighted by both dissidents, does not lack has presented a detailed case for change and a Having said that, Rasulo's main exposure was to the
for CEOs of major companies who well understand clear set of goals for the board to consider. While company's parks, arguably one of the least
the role of effective directors on a high-functioning the company argues that its existing turnaround concerning segments of the business at present.
board. However, the events leading up to the CEO plan already addresses most of Trian's suggestions, Though we do not have any concerns about his
transition in 2020 and the strategic missteps taken Trian's most significant contribution would be a ability to serve as an objective director, we recognize
over the past several years appear to indicate that focus on accountability and a shareholder that Rasulo's potential presence might create added
the board is not functioning in the most optimal way. perspective. With that said, Trian's campaign has friction on the board, especially since Rasulo was
With that in mind, a shareholder representative who fueled controversy, particularly as it relates to the seen as Perlmutter's choice as Iger's successor.
is well versed in the imperative to hold management role of Perlmutter, who the company and others
to account would be well positioned to provide the say may cast a baleful shadow over the board Despite Trian's explicit assertion that it does not seek
catalyst that this board apparently needs to improve should Peltz be elected. The board asserts that to remove Iger, or seek an executive role for Rasulo,
its effectiveness. While all directors must act in the Perlmutter's dislike for Iger is at the heart of this the board, which firmly believes Trian's campaign is
interests of all shareholders, the nexus between a contest; Trian argues that Perlmutter is only an fueled by Perlmutter's animus towards Iger, has
poor board decision and shareholders' financial investor in its fund and does not dictate its actions. argued otherwise, going so far as to suggest during
interests may be qualitatively more acute for a large By most accounts, his separation from DIS was well our engagement that Peltz might even seek to
shareholder who also represents their own interests warranted, as his clashes with other executives are appoint a family member as DIS' future CEO. Not
and those of their investors to whom they are also well documented. As such, Perlmutter's direct only do we find Trian's stated comments to be
directly accountable. involvement (he is listed as a participant in the sufficiently unambiguous on this topic, but we also
solicitation) is an unfortunate distraction, and it find the notion that Trian would put its investment at
March 21, 2024
risk by seeking Iger's premature ouster difficult to problematic compensation decisions, resulting in process, providing assurance to other investors that
believe. Moreover, the notion that Trian, with at significant shareholder opposition, which the the board is properly engaged this time around. He
most two seats on the board, would be able to hijack committee failed to promptly address. Despite could also help evaluate future capital allocation
DIS' succession process, seems nonsensical. actions taken in recent years, as of 2023 decisions. Moreover, multi-year concerns
shareholder support for DIS’ say-on-pay remained surrounding Lagomasino's role as a compensation
Among the dissidents' five nominees, Peltz, with his
below the median support for S&P 500 companies. committee member strengthen the case that Peltz's
considerable experience on other boards and
(Lagomasino also served as a member of the addition, on balance, would appear a net positive.
fiduciary duties owed to a large shareholding group,
appears best positioned to bring a shareholder compensation committees at Coca-Cola and Avon, Shareholders are recommended to vote FOR Nelson
perspective to the board. where shareholder discontent with executive Peltz on Trian's proxy card, and WITHHOLD votes
compensation was also evident at times.) As DIS' from Trian nominee Jay Rasulo, Blackwells nominees
Neither director targeted by Trian possesses a skill longest tenured independent director and a Craig Hatkoff, Jessica Schell, and Leah Solivan, and
set that is not possessed by a board member, or that member of the nomination and governance WITHHOLD votes from management nominee Maria
could be provided by a specialized consultant were a committee since 2019, she arguably bears more Elena Lagomasino. Shareholders are advised to
short-term need to arise. As the longest-serving accountability than most for the failed succession support the remaining management nominees.
independent member of the board, Lagomasino process prior to Iger's decision to step down in
bears more responsibility than any other serving 2020.
nominee for the failure of the Staggs/Rasulo "bake-
off," the failure to cultivate a readily apparent Vote Recommendation
successor to Iger following Staggs' departure, and Because the company has made positive changes
again following Iger's re-entry. The heir apparent to a to its board as well as operational changes that
CEO role at an iconic consumer-facing American have been well received by the market, we
company necessarily faces intense investor, board, recognize that some shareholders may feel that the
and media scrutiny. That the board has not seen fit company has sufficiently course corrected. These
to put anyone in this position since the departure of investors have likely drawn comfort from Iger's
Staggs in the first half of 2016 represents as close to return. Nonetheless, given the major missteps and
a single-issue indictment of a board's performance severe consequences of the failed 2020 succession,
that one could imagine. During her time on the particularly for a company that already had a
board, Lagomasino has chosen to support four history of succession drama, it may be difficult for
extensions of Iger's tenure as CEO, yet along with her others to simply trust that the board, albeit
shorter-tenured independent fellow directors, has refreshed, will get it right this time. These
not yet named a CEO successor. As a member of the shareholders may be concerned about post-Iger
compensation committee since joining the company DIS. Our analysis favors this latter view.
(and as chair of the committee since 2019),
Dissident nominee Peltz, as a significant
Lagomasino oversaw consecutive years of
shareholder, could be additive to the succession
March 21, 2024
3-YEAR TOTAL SHAREHOLDER RETURN

80 DIS US Equity SPX Index Peer Median
60
40
20
(20)
(40)
(60)
Oct '20 Sep '21 Sep '22 Sep '23
Source: Bloomberg
March 21, 2024
5-YEAR TOTAL SHAREHOLDER RETURN

120 DIS US Equity SPX Index Peer Median
100
80
60
40
20
(20)
(40)
(60)
Oct '18 Sep '19 Sep '20 Sep '21 Sep '22 Aug '23
Source: Bloomberg
March 21, 2024
HISTORICAL PERFORMAN CE—FINANCIAL METRICS

The Walt Disney Company Five-Year
FY 2023 FY 2022 FY 2021 FY 2020 FY 2019 FY 2018 CAGR
9/30/2023 10/1/2022 10/2/2021 10/3/2020 9/28/2019 9/29/2018
(mils) (mils) (mils) (mils) (mils) (mils)
Market Cap $ 148,304 $ 171,969 $ 319,832 $ 221,456 $ 234,107 $ 173,918 (3.1)%
Income Statement
Revenue $ 88,898 $ 82,722 $ 67,418 $ 65,388 $ 69,607 $ 59,434 8.4 %
COGS $ 59,201 $ 54,401 $ 45,131 $ 43,880 $ 42,061 $ 32,726 12.6 %
SG&A $ 15,336 $ 16,388 $ 13,517 $ 12,369 $ 11,549 $ 8,860 11.6 %
EBITDA $ 11,385 $ 12,492 $ 8,969 $ 4,303 $ 15,997 $ 17,848 (8.6)%
Adjusted EBITDA $ 15,053 $ 14,419 $ 9,623 $ 10,038 $ 15,997 $ 17,848 (3.3)%
Operating Income $ 5,196 $ 6,533 $ 3,005 $ (1,941) $ 11,830 $ 14,837 (18.9)%
Net Income $ 2,354 $ 3,145 $ 1,995 $ (2,864) $ 11,054 $ 12,598 (28.5)%
EPS (Adjusted) $ 2.98 $ 2.56 $ 1.30 $ 3.69 $ 5.05 $ 7.06 (15.9)%
Balance Sheet
Cash & ST Investments $ 14,182 $ 11,615 $ 15,959 $ 17,914 $ 5,418 $ 4,150 27.9 %
Total Debt $ 50,672 $ 52,259 $ 58,313 $ 62,323 $ 47,137 $ 21,028 19.2 %
Shareholders' Equity $ 113,012 $ 108,378 $ 102,224 $ 97,512 $ 102,852 $ 53,955 15.9 %
Cash Flow
Operating Cash Flow $ 9,866 $ 6,010 $ 5,567 $ 7,618 $ 6,606 $ 14,295 (7.1)%
Capex $ (4,969) $ (4,943) $ (3,578) $ (4,022) $ (4,876) $ (4,465) 2.2 %
Free Cash Flow $ 4,897 $ 1,067 $ 1,989 $ 3,596 $ 1,730 $ 9,830 (13.0)%
Margins and Return Ratios Change (ppt)
Gross Margin 33.4 % 34.2 % 33.1 % 32.9 % 39.6 % 44.9 % (11.5)
EBITDA Margin 12.8 % 15.1 % 13.3 % 6.6 % 23.0 % 30.0 % (17.2)
Adjusted EBITDA Margin 16.9 % 17.4 % 14.3 % 15.4 % 23.0 % 30.0 % (13.1)
Operating Margin 5.8 % 7.9 % 4.5 % (3.0)% 17.0 % 25.0 % (19.1)
Return on Assets 1.2 % 1.5 % 1.0 % (1.4)% 7.6 % 13.0 % (11.8)
Return on Common Equity 2.4 % 3.4 % 2.3 % (3.3)% 16.1 % 28.0 % (25.5)
Return on Invested Capital 2.1 % 2.7 % 1.9 % (1.7)% 8.1 % 17.8 % (15.8)
Source: Bloomberg
March 21, 2024
SHAREHOLDER BASE
Ownership Stake
Shares Pct O/S Filing Date Investor Type
1 Vanguard 151,443,485 8.3% ULT-AGG 12/31/23 Investment Advisor
2 Blackrock 122,883,021 6.7% 13G 12/31/23 Investment Advisor
3 State Street 75,698,718 4.1% ULT-AGG 12/31/23 Investment Advisor
4 Morgan Stanley 48,020,871 2.6% ULT-AGG 12/31/23 Brokerage
5 State Farm Mutual Auto Insurance 36,868,660 2.0% ULT-AGG 12/31/23 Insurance Company
6 Geode Capital Management 34,606,546 1.9% 13F 12/31/23 Investment Advisor
7 Trian Fund Management 32,337,856 1.8% 13F 12/31/23 Hedge Fund Manager
8 Northern Trust Corp 22,415,575 1.2% 13F 12/31/23 Trust
9 Norges Bank 21,471,340 1.2% 13F 12/31/23 Bank
10 Bank of New York Mellon 20,049,081 1.1% ULT-AGG 12/31/23 Investment Advisor
11 Fidelity 19,116,757 1.0% ULT-AGG 12/31/23 Investment Advisor
12 Franklin Resources Inc 18,158,648 1.0% ULT-AGG 3/11/24 Investment Advisor
13 UBS 16,886,997 0.9% ULT-AGG 12/31/23 Investment Advisor
14 Bank of America 15,499,108 0.8% 13F 12/31/23 Bank
15 Loomis Sayles 14,496,834 0.8% 13F 12/31/23 Investment Advisor
16 Legal & General 13,891,634 0.8% 13F 12/31/23 Insurance Company
17 Credit Agricole Group 13,798,661 0.8% ULT-AGG 12/31/23 Bank
18 Royal Bank of Canada 13,303,067 0.7% ULT-AGG 12/31/23 Bank
19 Newport Trust Co 12,401,911 0.7% 13F 12/31/23 Investment Advisor
20 T. Rowe Price 11,746,815 0.6% ULT-AGG 12/31/23 Investment Advisor
715,095,585 39.0%
Source: Bloomberg
March 21, 2024
BACKGROUND KEY EVENTS

The Walt Disney Company (DIS) is an international family entertainment and Sept. 22, 1984: Michael Eisner appointed CEO.
media enterprise that includes three business segments: Entertainment, Sports,
and Parks & Experiences. Aug. 1, 1995: Disney acquires Cap Cities/ABC in a $19 billion in cash and
stock deal.
Trian Fund Management, L.P. ("Trian") is a shareholder of DIS with a stake of
approximately 1.8 percent (including shares owned by Ike Perlmutter). Jan. 25, 2000: Bob Iger named COO and a director.
Blackwells Capital LLC ("Blackwells") is a shareholder which owns 157,131 Year 2002: Board members Roy Disney (nephew of Walt Disney), Stanley
shares, or 0.01 percent. Gold, and Andrea Van de Kamp attempt to remove Michael
Eisner as CEO.
Nov. 30, 2003: Roy Disney resigns from the board and calls upon Eisner to
resign his chairman and CEO positions. The next day, Gold
also resigns from the board.
Jan. 27, 2004: Roy Disney and Gold, in open letter, urge shareholders to
vote against the re-election of Eisner, George Mitchell,
compensation committee chair Judith Estrin, and former
nominating and governance committee chair John Bryson.
March 3, 2004: Company holds its 2004 annual meeting; Eisner receives 48.5
percent of votes cast. That day, the board elects Mitchell as
chairman, replacing Eisner, who remains on the board.
Sept. 10, 2004: Eisner announces his resignation as CEO, effective September
2006, upon the expiration of his contract. Eisner states that
his preferred successor is COO Iger.
Sept. 13, 2004: In open letter to the board, Roy Disney and Gold threaten to
run a contest 2005 AGM unless the board requires Eisner to
step down as CEO and director by the time of the meeting.
Feb. 1, 2005: Company states that it will announce a successor to Eisner as

CEO by June 2005.
Feb. 11, 2005: Company holds its 2005 annual meeting.
March 13, 2005: Company announces that Iger will serve as co-CEO with
March 21, 2024
Eisner until Oct. 1, 2005, at which point Iger will continue as the Dec. 14, 2017: Company announces that Iger will continue as CEO and
sole CEO. chairman until Dec. 31, 2021.
Sept. 30, 2005: Eisner resigns from the board, effective immediately. Eisner Feb. 25, 2020: Bob Chapek named CEO. Iger appointed executive chairman,
steps down as co-CEO the next day. with a term ending at the end of 2021.
Oct. 6, 2005: Company announces that Iger's employment term will expire Dec. 31, 2021: Iger resigns as director, Susan Arnold named board chair.
on Sept. 30, 2010.
June 28, 2022: Company announces extension of Chapek's contract to July 1,
Dec. 1, 2005: Mitchell agrees to remain as chairman through December 2006. 2025.
Jan. 24, 2006: Company announces acquisition of Pixar. Sept. 30, 2022: Company enters into a support agreement with Third Point
LLC and appoints Carolyn Everson to the board. Third Point
Feb. 1, 2008: Company extends Iger’s contract to Jan. 31, 2013. had publicly urged the company to permanently cancel its
Aug. 31, 2009: Company announces acquisition of Marvel Entertainment Inc. dividend in 2020, offer its content on one platform in 2021,
and reposition its portfolio by acquiring Comcast's share in
Oct. 6, 2011: Citing the need for a smooth CEO transition, company Hulu joint venture and spinning off ESPN in the summer of
announces extension of Iger's employment term to March 31, 2022.
2015. Company also announces that Iger will become chairman
at 2012 AGM and serve in this role through June 30, 2016. Nov. 20, 2022: Chapek steps down; Iger appointed CEO for a two-year term.
March 13, 2012: Company holds annual meeting; Iger assumes board chair Nov. 21, 2022: The Wall Street Journal reports that Trian has built a position
duties. worth $800 million, "does not believe Mr. Iger should be
back in control," and is seeking a board seat.
Oct. 30, 2012: Company announces acquisition of Lucasfilm Ltd.
Jan. 11, 2023: Trian issues a press release disclosing its intent to nominate
July 1, 2013: Company announces that Iger will serve as CEO until June 30, Nelson Peltz to the board.
2016.
Jan. 11, 2023: Company announces that director Mark Parker will be named
Oct. 3, 2014: Company announces that Iger will continue as CEO and chairman following 2023 AGM, replacing Susan Arnold, who
chairman until June 30, 2018. is stepping down from the board because of Disney's 15-year
term limit. The board size is reduced to 11 members; the
Feb. 5, 2015: Thomas Staggs named COO; management other than the CFO board creates a succession planning committee to be chaired
to report jointly to him and Iger. by Parker.
April 6, 2016: Company announces departure of Staggs, effective May 6, Jan. 24, 2023: Company amends 10-K to highlight succession planning
2016. expertise of three of its board members.
March 23, 2017: Company announces that Iger will continue as CEO and Jan. 31, 2023: Dissident files definitive proxy statement.
chairman until July 2, 2019.
March 21, 2024
Feb. 6, 2023: Company files definitive proxy statement; includes details of re-election. The press release also states that Peltz is working
Isaac (Ike) Perlmutter, Chairman of Marvel Entertainment, in partnership with Perlmutter, who owns 78 percent of the
advocating for Peltz. shares of Peltz' claimed beneficial ownership.
Feb. 8, 2023: DIS announces reorganization into three divisions, $5.5 billion in Nov. 30, 2023: Company reinstates dividend after suspending it due to the
cost cuts, and elimination of 7,000 jobs. pandemic.
Feb. 9, 2023: Trian issues a press release congratulating the company and Nov. 30, 2023: Blackwells issues a press release expressing support for the
Iger on their recently announced operating initiatives; restructuring at DIS led by Iger and for the appointment of
announces that it is withdrawing its nomination of Peltz. Gorman and Darroch. The press release states that displacing
these individuals with Peltz and another Trian nominee
April 5, 2023: Perlmutter issues a statement explaining why he supports Trian. would deprive shareholders of valuable voices in the
The press release states that despite his employment boardroom at a critical time in DIS' history.
termination, he will continue to hold his shares and to seek
improvements at the company for the benefit of all Dec. 5, 2023: Ancora Holdings Group, LLC, a DIS shareholder with a stake
shareholders. of approximately $6.5 million, issues a press release
expressing its support for the addition of a shareholder
May 30, 2023: Peltz sends a letter to the company stating that he believes the representative on the board and calling on DIS to pursue a
stock reaction to the earnings call in February was too negative; compromise with Trian.
in a separate call with Iger and CFO Christine McCarthy,
reiterates his belief that he should get a board seat and informs Dec. 14, 2023: Trian discloses that it has nominated Nelson Peltz and James
them that he intends to nominate a slate at the 2024 AGM. Rasulo to the DIS board.
July 3, 2023: Board informs Peltz that it has determined not to offer him a Jan. 3, 2024: Company announces that it has entered into a confidentiality
seat. agreement with ValueAct, and that ValueAct has agreed to
support its nominees at the 2024 AGM.
July 12, 2023: Company extends Iger's contract through Dec. 31, 2026.
Jan. 3, 2024: Blackwells announces through a press release that it has
Oct. 8, 2023: Media reports that Trian has accumulated a holding valued at nominated Jessica Schell, Craig Hatkoff, and Leah Solivan to
over $2.5 billion and is planning a fresh push for board seats. the DIS board.
Nov. 11, 2023: Media reports that ValueAct Capital Management, L.P. Feb. 1, 2024: DIS files definitive proxy statement.
("ValueAct") has built an undisclosed stake in the company.
Feb. 1, 2024: Trian files definitive proxy statement.
Nov. 19, 2023: During a meeting with CEO, Peltz requests a seat on the board,
as well as two additional mutually agreed upon candidates. This Feb. 6, 2024: Blackwells files definitive proxy statement.
request is reiterated in a letter to the board, sent on Nov. 24.
Feb. 7, 2024: DIS reports 1Q FY24 earnings as well as several strategic
Nov. 29, 2023: Company announces appointment of James Gorman and announcements; stock jumps 11.5 percent.
Jeremy Darroch to the board; Francis deSouza will not stand for
March 21, 2024
have declined, while net leverage increased from 0.9x to 1.9x. In addition, the
DISSIDENT CRITIQUE dissident reports that during this time period, segment operating income
Trian declined by 18 percent, with declines in every segment except the Experiences
business, free cash flow declined by 50 percent, adjusted after-tax free cash
According to Trian, the board lacks focus, alignment, and accountability, which flow (excluding strike benefits) declined by 74 percent, and adjusted EPS
has resulted in DIS not managing its valuable assets to their full potential. declined by 47 percent. The company paid a dividend of $0.30 per share in
COMPANY PERFORMANCE FY23, compared to $1.68 in FY18. By contrast, most of DIS' media peers grew
their adjusted EPS during this period, other than WBD and PARA. In addition, all
Trian compares DIS TSR performance to the company's proxy peers, parks and of DIS' proxy peers other than WBD and PARA had higher ROIC in FY23.
travel peers, and S&P 500 and reports that DIS TSR has underperformed over one-
, three-, five-, and ten-year periods, as well as since the announcement of its Trian characterizes the Fox acquisition as strategically flawed because it
"transformation" plan in conjunction with Q1 FY23 earnings release, through Oct. increased DIS' exposure to linear TV and strained its balance sheet. According
6, 2023, the last trading day before the Wall Street Journal reported that Trian to Trian, approximately 67 percent of Fox's pro forma EBITDA was generated
was planning to launch a proxy fight at the 2024 AGM. The proxy peers include from linear networks, a structurally challenged business. Since the acquisition,
Alphabet (GOOG), Amazon (AMZN), Apple (APPL), Comcast (CMCSA), Meta DIS has discontinued 130 international TV channels and recognized a $5 billion
(META), Netflix (NFLX), Paramount (PARA), and Warner Bros. Discovery (WBD). impairment. Fox's India (Star) business declined after the acquisition and is
The parks and travel peers include Carnival (CCL), Cedar Fair (FUN), Hilton (HLT), expected to lose money in FY24, according to the Wall Street Journal. Trian
Hyatt (H), InterContinental (IHG), Marriott (MAR), Norwegian Cruise Line (NCLH), states that the recently announced JV with Reliance Industries Limited and
Royal Caribbean (RCL), Six Flags (SIX), United Parks & Resorts (PRKS), and Vail Viacom 18 Media was negotiated from a position of weakness, as evidenced by
Resorts (MTN). According to Trian, over a 10-year period, DIS has DIS expecting to recognize an approximately $2 billion impairment charge.
underperformed its proxy peers, parks and travel peers, and the S&P 500 by 401 Finally, Trian argues that acquiring a controlling interest in Hulu as part of the
percentage points, 89 percentage points, and 168 percentage points, respectively. acquisition seemed to be at odds with DIS' strategy to focus on franchise
Similarly, underperformance versus all three groups has ranged between 30 and content. Trian questions whether DIS delivered on its targeted $2 billion in
90 percentage points over five-, three-, and one-year periods. Since 1Q FY23, DIS synergies from the transaction by presenting an analysis which shows that DIS'
has underperformed the three groups by 38 percentage points, 23 percentage pro forma FY18 EBIT (ex. Experiences) would have been $12.7 billion, including
points, and 32 percentage points, respectively. Trian states that buying DIS shares Fox FY18 EBIT of $1.9 billion, synergies of $2.0 billion, and estimated $1.5
on 2,333 trading days out of the total 2,519 trading days over the 10 years billion from consolidating Hulu due to controlling ownership. Comparing this to
through Oct. 6, 2023, would have resulted in a loss. DIS FY23 ex-Experiences EBIT of $4.8 billion and accounting for $2.6 billion
streaming losses suggests that comparable EBIT declined by 81 percent to $2.2
VALUE-DESTRUCTIVE CAPITAL ALLOCATION
billion since the acquisition.
Trian calculates that DIS has invested nearly $200 billion of cumulative
Trian points out that after the announcement of the deal, the board extended
incremental capital since 2018, including the 2019 acquisition of the film and
Iger's contract by four years and awarded him a compensation package that
television studios and franchises of 21st Century Fox ("Fox" acquisition) for $57
created a strong financial incentive for him to pursue the deal regardless of its
billion (net of subsequent divestitures of Regional Sports Networks and other
prospects. Specifically, Trian shows that Iger's post-Fox target compensation
assets), $22 billion of capex, primarily in the Parks & Resorts business, and $120
increased to a maximum of $456 million from a targeted $270 million.
billion of content investments. According to Trian, despite these investments and
growing revenues by 50 percent during this period, DIS' earnings and cash flow
March 21, 2024
FAILED STRATEGY AND EXECUTION Sports) was 7 percent in CY2023, below that of Paramount (8 percent),
DIS' execution of its streaming business launch is a key focus of Trian's critique. NBCUniversal (9 percent – Comcast's Content and Experiences segment
Trian points out that cord cutting and NFLX' streaming subscriber growth were excluding the impact of Theme Parks), Netflix (22 percent), and Warner Bros.
already apparent in 2015, yet it took DIS until 2019 to launch its own streaming Discovery (24 percent), despite having the highest revenues among these peers
service. Once it was launched, it achieved scale faster than expected, partially of $56 billion.
helped by the pandemic, and today has 160 million global Disney+ and 51 million According to Trian, since DIS announced a $7.5 billion cost reduction plan in
Hulu subscribers, is generating $23 billion in revenues, has a high level of February 2023, consensus estimates for FY24 and FY25 have declined, with
engagement, with streaming minutes at 68 percent of NFLX' among bundle FY25 EPS estimate currently at $5.48, down from $6.61.
consumers, and low churn at 3-4 percent. Despite these advantages, DIS has LIMITED TRANSPARENCY IN TURNAROUND PLAN
reported $14 billion in cumulative losses in direct-to-consumer (DTC) since FY18,
which, according to Trian, were a result of aggressively low price points, Trian characterizes recent strategic announcements as half-baked and lacking
unfavorable wholesale deals, undisciplined content and marketing spend, focus in detail, and contends that they highlight continuous failures of oversight by
on maximizing distribution rather than engagement, and suboptimal technology the board. As an example, ESPN's new JV was announced before a definitive
platform. Trian argues that given DIS' DTC scale, its margins should be similar to agreement was finalized and before discussions were held with key partners
NFLX's at the time it had similar revenues. Specifically, according to Trian, when (NFL and NBA), potentially straining those relationships. Management also has
NFLX was generating $20 million in revenues in CY 2019, its operating profit not provided details on the plans for the $1.5 billion investment in Epic Games
margin was 13 percent. Trian estimates that DIS' cost of revenue, tech & other or the $60 billion planned investment into parks.
opex is 88 percent of revenue vs. NFLX's 69 percent in CY19, while DIS' SG&A & In addition, Trian asserts that public commentary by management regarding
other is 22 percent of revenues vs. NFLX's 18 percent. strategic questions without a fully-formed plan confuses and frustrates
Trian is concerned with the current state of DIS' studios and creative processes. investors and partners. As an example, Trian states that DIS' repeated public
Of the recent releases, the dissident points out that Haunted Mansion reportedly comments about launching a flagship ESPN streaming service in the future
failed to earn back its budget, The Marvels ended its box office run as the lowest- irked Charter, leading to a dispute. Additionally, Trian points out that Iger's
grossing MCU movie in history, Lightyear was Pixar's second lowest-grossing comments about linear assets not being "core" to DIS were interpreted as an
release overall, Indiana Jones 5 is on track to lose money in its theatrical run, and intention of selling that business, which did not materialize.
Wish reportedly failed to break-even on its approximately $200 million budget. GOVERNANCE CONCERNS
Trian points out that while DIS had been the highest-grossing studio at the global
box office since 2015, it came in second in 2023 with $4.8 billion globally versus Trian charges that the board has failed to properly fulfill its responsibilities by
Universal's $4.9 billion, according to Variety. not providing adequate oversight of strategy, M&A, and capital allocation, not
promoting a healthy corporate culture and accountability, failing to plan for
Trian questions the ongoing strength of DIS' flywheel and points out that the executive succession, not aligning incentive compensation with performance,
consumer products segment revenue has stayed flat between FY18 and FY23 and failing to proactively engage with investors. As it relates to corporate
despite significant increase in spend on produced and licensed content during culture, Trian states that executives who express contrarian views appear to be
that period, from $13 billion in FY18 to $30 billion in FY22 and $27 billion in FY23. at risk of being pushed out, while the company culture seemingly rewards
In addition, Trian cites Axios Harris Poll 100 Annual Reputation Quotient to show those who avoid debate.
that DIS' brand reputation has declined since 2017.
Trian states that the board's succession failures have created a leadership void,
Trian states that DIS' EBITDA margin in its media business (Entertainment and
March 21, 2024
an inconsistent strategy, and organization dysfunction. Since giving Iger his first out that the candidates did not meet any non-management directors in person,
contract extension in 2011 through 2016 with a stated goal of planning for nor were invited to an interview with the NomGov committee. Trian suspects
succession, the board extended his contract another four times over the next six that the board never considered a meeting or a call with Rasulo, even though
years, resulting in departures of talented executives. Further, Trian argues that none of the non-management directors had overlapped with him at DIS.
Iger's appointment as executive chairman in 2020 with higher pay than the CEO, Additionally, Trian states that during just one 45-minute meeting with the
authority over creative endeavors, and the retention of his old CEO office created board in 2023, not a single non-management director asked a question, DIS
an unprecedented structure that obscured leadership and accountability. Lastly, only offered Trian a meeting with non-management directors after rejecting its
Trian points out that the board unanimously agreed to extend Chapek's contract candidates, and that DIS' claims of 20 meaningful interactions since February
in June 2022 only to fire him five months later and hired Iger back seemingly 2023 is not accurate as the proxy only lists 11 interactions, of which the vast
before considering other candidates. Trian points out that the board's current majority were just emails or short calls. Trian suggests that the board might
succession planning committee is composed of three out of four directors who have saved $40 million of shareholders' money by meeting Trian's candidates
failed to successfully execute a succession in 2020. and avoiding the proxy contest. Regarding Peltz's relationship with Perlmutter,
Trian states that the relationship is guided by an investment management
Trian argues that the board has failed to align NEO compensation with the
agreement and that there will not be sharing of any MNPI between the parties.
interests of DIS shareholders. While DIS' TSR underperformed the S&P 500 since
2013 (37 percent versus 206 percent), DIS cumulative NEO compensation was $1 PROPOSED INITIATIVES
billion, according to Trian, with annual bonus payouts exceeding 100 percent of Trian states that its goal is to work with other members of the board to work
target for 10 of the past 11 years. Trian points out that the FY23 ROIC target was on the following:
set below WACC at 5.6 percent in FY23 (with actual 5.7 percent, which resulted in
103 percent payout on ROIC test), compared to estimated WACC of • Enhance corporate governance and accountability: fix the succession
approximately 9 percent. In FY23, total compensation paid to NEOs was $83 process and run a successful search for a CEO in time for Iger's 2026
million despite negative TSR, with 99 percent payout on financial performance retirement, align pay with performance, and form a board-level finance and
despite missing consensus estimates. Additionally, the CEO received a 145 strategy committee;
percent discretionary payout rate that year for "other performance factors." • Accelerate media profitability: target and achieve Netflix-like margins of 15-
Citing CNBC, Trian expresses concern with reports that many of the directors have 20 percent by FY27 in streaming, consider changes to product and
personal relationships with Iger. Trian highlights its ownership of approximately marketing strategies and reducing redundant overhead costs, right-size
$3 billion of shares vs. $15 million and $20 million ownership by independent legacy media business cost structure, and evaluate the organization's
directors and Iger, respectively. Trian reports that the cumulative value of shares structure to improve accountability and efficiency;
sold by Iger since 2005 amounts to $1,097 million. • Review of creative engine: comprehensive board-led review of studio
According to Trian, DIS' TSR underperformed that of the S&P 500 during each operations and culture, re-focus on "flywheel" through prioritizing IP and
incumbent director's tenure through the unaffected date, with underperformance exploring opportunities through digital cross-promotion;
ranging from (26) percent during Carolyn Everson's one-year tenure to (167) • Clarify strategic focus: commit to a FCF growth target beyond FY24, explore
percent during Mark Parker's eight-year tenure. The underperformance over the strategic partnerships for non-core linear assets, develop a digital strategy
tenure of the two targeted directors, Michael Froman and Maria Elena for ESPN that has a clear path to attractive returns, and include tangible
Lagomasino, was (88) percent and (160) percent, respectively. return targets for the Parks capex program.
Trian criticizes the company's engagement with it and its candidates, and points
March 21, 2024
Blackwells that DIS EV/EBITDA has compressed from 42.6x to 13.9x over the last three
years.
Blackwells states that it supports the board and management and would continue
Blackwells states that Iger's pay of $47 million since reinstatement is not
to support the company's transformation efforts under Iger if its nominees are
justified relative to his 7.2 percent underperformance versus the S&P 500.
elected. However, Blackwells believes that the board needs to add skills and
independence, and that in three years, the company has lost more than $200 In addition to governance concerns, Blackwells states that other issues prevent
billion in market value due to failings in the areas of content, media, technology, DIS from unlocking its full potential – poor capital planning, suboptimal media
and governance best practices. Blackwells states that while the company's and content strategy, lack of transparency and poor strategic oversight, and
directors are well-qualified and are appropriate fiduciaries, the board lacks media mediocre technology strategy.
experience, entrepreneurship, and innovation despite being a preeminent media Blackwells points out that DTC is unprofitable, that DIS' 4.3 percent churn is
company. Specifically, Blackwells points out that only three out of 12 directors higher than NFLX's 2.5 percent, and that total current DTC subscribers are
have media and entertainment experience, that two directors, Michael Froman below 2022 peaks. In addition, Blackwells contends that DIS missed
and Maria Elena Lagomasino, have only one skill relevant to the board (360 opportunities for additional revenues by limiting exposure of its content
Degree Brand Activation), and that six are CEOs, which Blackwells argues do not beyond owned platforms and shortening the time between theatrical releases
make the best board members, citing a Forbes article. According to Blackwells, and streaming. Finally, Blackwells states that 2022 and 2023 were dismal years
DIS has the highest number of sitting CEOs compared to its peers, a role that at the box-office for DIS despite the release of multiple major films.
demands significant time and attention.
Blackwells questions the company's ability to transition ESPN to DTC at the
Blackwells argues that some directors lack independence through overlap on same time as building a general entertainment service and suggests that selling
other boards and characterizes the board as "clubby." According to Blackwells, ESPN and selectively bidding for sports rights in the Disney/Hulu app may be a
Iger is close personal friends with Mark Parker, Safra Catz, Froman, and Mary better option.
Barra. In addition, Froman, Lagomasino, and newly appointed director James
Gorman are all on the Council on Foreign Relations, and Lagomasino and Everson Blackwells states that DIS suffers from an information discount and trades at
both serve on the Coca-Cola board. Mason Morfit of Value Act, while not a board the lowest common multiple of its segments, partly because it lacks
member, is a close personal friend of Gorman and Iger's, according to Blackwells, transparency.
making him akin to a shadow board member. Finally, Blackwells points out that Blackwells argues that DIS should strive to be valued as a technology firm.
the board failed to successfully plan for succession and cites a New York Post However, according to Blackwells, the company's technological efforts have
article that states that Chapek was hand-selected by Iger as his successor. fallen short, as evidenced by technological fragmentation between DIS'
Blackwells reports that the company's share price and TSR underperformed those segments and sub-segments; a lack of innovation to keep up with technological
of its peers and the S&P 500 in the last three and five years, that DIS' current P/E advances; a lack of an integrated way to address technological opportunities
of 20.5x is below peers' average of 27.0x, and that DIS share price is and challenges by failing to develop technological services on its own; and a
approximately 45 percent below its peak in February 2021. For peer comparisons, lack of clear strategy on developing leadership in spatial computing
Blackwells's set of peers includes Alphabet (GOOG), Amazon (AMZN), Apple (augmented reality (AR)/virtual reality (VR)) and artificial intelligence (AI).
(AAPL), IBM (IBM), Meta (META), Microsoft (MSFT), Netflix (NFLX), Spotify (SPOT), Blackwells states that an independent technology expert is needed on the DIS
and TakeTwo (TTWO). Blackwells states that every DIS board member has board to address these issues and that its next CEO must have his/her roots in
overseen DIS underperformance relative to the S&P over their tenures, with technology. In addition, Blackwells suggests that the company appoint a
underperformance ranging between 7.2 and 149.6 percent. Blackwells reports company-level CTO, rather than having two CTOs within the segments,
March 21, 2024
mirroring the organization structure at NFLX, AMZN, and AAPL. CRITIQUE OF TRIAN CAMPAIGN AND VALUEACT AGREEMENT
Blackwells reiterates its opposition to Trian's campaign, stating that Peltz has
Blackwells reports that DIS spends 1-2 percent of annual revenue on R&D,
not offered any strategic ideas, that Trian's nominees lack relevant skills for DIS'
compared to AMZN's 14-15 percent, NFLX' 8-9 percent (using technology and
board, and that Trian's campaign is driven by personal agenda. Blackwells
infrastructure expenses as proxy for R&D for both AMZN and NFLX), and AAPL's 7-
argues that Peltz and Rasulo, as well as their key supporter Perlmutter, appear
8 percent.
to harbor personal animus towards DIS, making them inappropriate agents for
Blackwells states that DIS is behind its peers in utilizing spatial computing and AI change. Blackwells points out that Peltz asked DIS for a board seat over 24
and argues that using this technology would provide for personalization of times. Blackwells argues that while it is looking to fill some skills gaps on the
consumer experience. Some examples of such uses would be ChatGPT with board, Peltz and his supporters have personal agendas.
Disney characters, 3D Lightsaber spar with a Jedi on the holodeck, and AR
Nevertheless, Blackwells agrees with Trian on a number of issues and states
applications to overlay Mickey Mouse Clubhouse, characters and content on app
that Trian's campaign has a similar case for change. Some of the issues
and in-home.
Blackwells cites that overlap with Trian's stated criticisms include DIS' charging
Blackwells estimates that since the beginning of 2023, the largest tech companies over $500,000 to provide its NoBo list, TSR underperformance vs. peers,
have added over $5.2 trillion to their cumulative market caps after announcing distracted board members, poor succession planning, capital allocation,
major AI initiatives and argues that AI's impact on DIS would be comparable to its insufficient transparency, profitability of the DTC business, and DIS' streak of
impact at large tech companies. unsuccessful movie releases. Blackwells believes that its nominees would
Blackwells states that DIS must double down on innovation. According to provide effective solutions to many of the issues that Trian points out, though
for which Trian proposes only underwhelming solutions.
Blackwells, DIS receives low rankings in surveys identifying innovative and
influential companies. As an example, Blackwells cites a ranking by Fortune, which Blackwells expresses concerns about the information sharing agreement
places DIS at number 63, with GOOG, MSFT, and AAPL in the top ten. In addition, between DIS and ValueAct and states that it will ensure that this arrangement
Blackwells includes a chart that shows that the number of patents filed by DIS is terminated if its nominees are elected. In a stand-alone investor
that mention innovative terms is below that of the tech companies that presentation, Blackwells questions the relationship between ValueAct and DIS,
Blackwells believes are DIS' peers. asserting that ValueAct's support for the company is undermined by conflicts of
interest.
Additionally, Blackwells proposes that DIS explore strategic possibilities related to
its owned real estate, which represents approximately 44 percent of its market
capitalization at cost, according to Blackwells. Blackwells suggests that DIS could
separate its owned real estate into an independent publicly traded REIT or a
series of investment vehicles in which the shares, cash, and/or interests could be
distributed to shareholders.
Blackwells is not specifically targeting any of the incumbent directors and states
that the democratic process afforded by the universal card will help decide who
the best nominees are. Blackwells believes that it is offering shareholders a
"middle of the road" approach that would allow its nominees to offer their skills
and work collaboratively with the incumbent board to reach the best solutions.
March 21, 2024
returned, over both of Iger's tenures as CEO, and over the past three and five
BOARD RESPONSE years, all ending on Feb. 29, 2024. The board argues that it took Netflix ten
years to achieve profitability, in a different competitive environment, and that
The board maintains that its strategic transformation, which focuses on studio the company expects to achieve profitability in streaming by the end of FY24,
creativity, streaming profitability, ESPN's future, and Experiences growth, is only five years from the launch of Disney+. In addition, operating losses in
working. entertainment DTC have reduced $928 million from FY22 and $846 million in
RESTORING AUTHORITY TO CREATIVE LEADERS 1Q FY24 from the same quarter in the previous year, the board notes.
According to the board, the separation of content creation and content EXPERIENCES
distribution under former CEO Chapek created inefficiencies and disrupted the The board emphasizes that its Experiences business is the company's most
link between content creation and economic results. The board states that profitable segment. The company's approximately $60 billion 10-year
creative teams now control what content is created, and how it is marketed, investment plan will focus on expanding the company's developed footprint
distributed, and monetized. This more efficient structure contributes to the near its existing resorts, investments in technology to improve the guest
company's cost-cutting plan, which has targeted a $4.5 billion reduction in annual experience, and attracting new visitors. Approximately 50 percent of
entertainment cash content spending. During engagement with ISS, the board investments will be in parks and resorts, 30 percent will be in technology and
mentioned that the content distribution team created by Chapek ultimately grew maintenance, and 20 percent will be for cruise lines and other areas, the board
to 3,700 people. Most of these hires were laid off after Iger announced headcount states. During engagement with ISS, the board stated that while the company is
reductions in February 2023. not providing guidance on specific investments to shareholders, the board has
The board notes that DIS had 20 Academy Award nominations in 2024, more than reviewed and approved a detailed plan, including investments into parks and
any other company, topped the box office globally in seven of the past eight Epic Games. The company points out that revenues in the segment have
years, and has had eight of the 10 highest grossing films of all time globally. The increased from $21.6 billion in FY19 to $28.2 billion in FY23 and operating
company highlights an experienced leadership team that includes Alan Bergman income has increased from $4.9 billion to $7.0 billion over the same period.
and Dana Walden, co-chairmen of Disney Entertainment; Josh D'Amaro, chairman TURNAROUND PLAN
of Disney Experiences; Jimmy Pitaro, chairman of ESPN; and Asad Ayaz, the
company's chief brand officer. Since Iger returned to the company in November 2022, the board highlights
that he has readjusted creative accountability structures, instituted cost
STREAMING savings, reduced streaming losses, trimmed the number of creative offerings,
The board states that it is overseeing a long-term streaming strategy that began announced investments in parks, announced new distribution platforms for
in 2015 with the company's acquisition of a 33 percent stake in BAMTech and the ESPN, cut costs for linear TV, increased FCF, and reinstated dividend and
Fox acquisition. The board maintains that the Fox acquisition was an investment buyback programs. In response to the dissident's criticism of the
into content and helped drive growth in subscribers. During engagement with ISS, announcement of ESPN's JV with Fox and Warner Bros., the board
the board stated that it was the correct strategic move given the information it acknowledged during engagement with ISS that this caused some confusion;
had at the time, and that it was necessary as a defensive move to prevent however, the board asserted that the announcement needed to be made as
Comcast from acquiring a majority stake in Hulu. The board points out that the soon as possible to avoid a leak and that shareholders deserved to learn about
company's TSR compares favorably to that of Warner Bros. and Paramount, two the JV before distributors.
competitors also transitioning from pay TV to streaming, over the time since Iger
March 21, 2024
The board concedes that average annual return of capital to shareholders has Froman's expertise with foreign relations and trade and Lagomasino's
decreased from $5.9 billion over FY06-FY20 to $4.4 billion projected in FY24, but shareholder perspective and corporate governance background. By contrast,
that the company's FCF profile has improved from $1.1 billion in FY19 to $4.9 the board maintains that Nelson Peltz has no media experience, and a track
billion in FY23, and stated guidance of approximately $8 billion in FY24E. The record of value destruction in industries outside of the consumer packaged
company expects to exceed its $8 billion guidance, approaching its pre-pandemic goods industry. Regarding Jay Rasulo, the board states that he did not drive the
levels. DIS paid a $0.30 per share dividend in January 2024, which will increase by company's strategy and value creation during his time as a DIS executive, and
50 percent in July 2024, and the company has targeted $3 billion in share that his knowledge of the company is stale; it adds that the share price of
repurchases in FY 2024, the board adds. iHeartMedia has declined by 87 percent since Rasulo joined that board on May
17, 2019, through Feb. 22, 2024.
The company's net leverage of 2.4x is below Warner Bros and Paramount and
only higher than Netflix and Fox, and the company's credit rating is superior to all The board maintains that Peltz does not understand the challenges currently
of its competitors, according to figures presented by the board. facing the company or the media industry, has insisted on a board seat for
himself, and has a "deeply concerning" track record at other companies on
The company is on track to exceed its $5.5 billion annual cost savings target
whose boards he has served. The board is particularly critical of Peltz'
announced in February 2023 and is currently expecting to achieve $7.5 billion in
assertions that the board should lead a review of the creative process, target
annual savings by the end of FY24.
margins similar to those of Netflix by FY 2027, or bundle ESPN+ with the
CORPORATE GOVERNANCE offerings of a competitor such as Netflix. The board points out that most of the
In response to Trian and Blackwell's specific questions about the composition of shares represented by Trian's campaign are held by Ike Perlmutter, who has a
the board, the company states that each member of the board was recruited by a fraught history with Iger. The board believes that the addition of Peltz (and
search firm and that Iger only knew three members of the board before their Perlmutter, by extension) to the board would be value-destructive, waste time
appointment – Froman, whom Iger met in 2012, Darroch, and Gorman. and resources, and deprioritize creativity at the company. The board maintains
that it has sought constructive engagement with Peltz, but that Peltz's
The board states that it is focused on selecting a new CEO, and has established a campaign has been a 20-month distraction for the company. The board asserts
four-member succession planning committee to lead the process. Two members that based on its calculations, of the 14 boards on which Peltz has served, only
of the committee, board chair Mark Parker and James Gorman, oversaw six have outperformed the S&P 500 over his tenure, and that median board
transitions at Nike and Morgan Stanley, respectively, the board points out. This tenure performance has been 250 basis points worse than the S&P 500.
committee met seven times in 2023, retained a search firm, and has begun to
review internal and external candidates. The company points out that Trian has sold 2.3 million shares since Dec. 2022.
The board states that Iger's compensation is less than that of peer CEOs at BLACKWELLS CAMPAIGN
Paramount, Comcast, Warner Bros., and Netflix, and that 96 percent of his The board criticizes Blackwells' theses of breaking up the company, spinning off
compensation is at risk. The board also notes that each of the eight independent property into a REIT, and relying more heavily on AI, virtual reality, and
directors who have served for more than three years held a median of $1.6 augmented reality, stating that its business works best as a whole, that real
million in company stock as of Feb. 1, 2024. estate is a key component of the company's strategy, and that the company is
TRIAN CAMPAIGN already at the forefront of spatial computing and AI in many respects. The
board also suggests that Blackwells' nominees are unqualified to serve on the
The board argues that Trian's campaign, which targets directors Froman and company's board, due to their lack of media experience or public board service.
Lagomasino, seeks to remove important skill sets from the board, such as
March 21, 2024
ANALYTIC FRAMEWORK 1. IS CHANGE WARRANTED?

In analyzing proxy contests, ISS focuses on two central questions: Total Shareholder Return
1. Have the dissidents made a compelling case that change is warranted?
The company considers two groups of peers, General Industry Peers and Media
2. If so, which nominees are most likely to drive that change? Industry Peers, as well as the S&P 500, in its NEO compensation analysis and
decision making. The company uses the S&P 500 index to measure its economic
When the dissidents are seeking board control, ISS looks for a well-reasoned and
performance.
detailed business plan (including the dissidents’ strategic initiatives), a transition
plan that describes how the change in control of the company will be effected, The company's Media Industry group includes GOOG, AMZN, AAPL, CMCSA,
and where management continuity may be an issue, the identification of a META, NFLX, PARA, and WBD and was used by Trian in its TSR analysis. Black-
qualified and credible new management team. wells used GOOG, AMZN, AAPL, IBM, META, MSFT, NFLX, SPOT, and TTWO in
its analysis. The company argues that of its Media Industry Peers proxy group,
When the dissidents are seeking a minority position on the board, ISS does not
require a detailed plan of action, nor that the dissidents prove their plan is only the legacy media peers, PARA and WBD, are relevant for TSR comparisons
preferable to the incumbent plan. Instead, ISS will require that dissidents prove as they face a similar transition from legacy pay TV to streaming. However,
that change is preferable to the status quo and that the dissident slate will add unlike these two companies, DIS has a profitable Experiences business, which
value to board deliberations of the issues at hand. generated 68.7 percent of segment operating income in FY23. In addition, DIS'
streaming revenues have grown at a 23.5 percent CAGR since FY20 and in FY23
constituted 22.4 percent of revenues. Therefore, ISS also included CMCSA and
NFLX, DIS' key competitors in parks and streaming, respectively, in the TSR
analysis below.
DIS significantly underperformed the S&P 500 over the one-, three-, and five-
year periods through Oct. 6, 2023, the last trading day before the Wall Street
Journal reported that Trian
was preparing to run a
proxy fight at the 2024
AGM. However, DIS' per-
formance relative to its
peer group has been
mixed.
Over the five-year period
through the unaffected
date, DIS TSR of (27.1) per-
cent was 1.9 percentage
March 21, 2024
points below the peer median; however, DIS outperformed the group by 5.0 per- to run a proxy contest. From Oct. 6, 2023 through March 15, 2024, DIS shares
centage points over the three-year period. While the absolute TSR has improved are up 35.0 percent, compared to S&P's 18.8 percent increase. Over this peri-
since Iger's return as CEO and over the one-year period, the company underper- od, the top two one-day rallies in DIS occurred on Feb. 8, 2024 (11.5 percent on
formed the peer median by 22.2 percentage points and 32.7 percentage points, 3x average daily volume), the day after the 1Q FY24 earnings release, and Nov.
respectively, during these time periods. 9, 2023 (6.9 percent on 3x average daily volume), the day after the 4Q FY23
earnings release.
Extending this analysis through March 15, 2024, the company's relative and abso-
lute TSR has im-
proved. DIS has DIS 2-Year Share Price Performance
outperformed the
median of its peers $150 DIS settles with Third Point; DIS announces agreement 140.0
by 4.9 percentage Everson appointed to the board 2Q FY23 earnings
with ValueAct;
points since Iger's 3Q FY23 earnings Blackwells discloses
Trian discloses intention to
its nominees
nominate Peltz to the board; 1Q FY24 earnings
return as CEO and Parker to be named chairman, 120.0
its underperfor- board creates a succession
planning committee
mance relative to Media reports Trian
peers has nar- plans to run a proxy fight
100.0
rowed to 14.7 per- $100
centage points in
the past year. 2Q FY22 earnings 80.0
3Q FY22 earnings
Both Trian and the Trian withdraws nomination following
Trian discloses
4Q FY22 earnings 1Q FY23 earnings release
company have its nominees
60.0
pointed out that 4Q FY23 earnings
share performance Chapek steps down; Iger appointed CEO; Media reports ValueAct
$50 media reports that Trian has built a position has built a stake
has improved since
40.0
the unaffected
date, with each
side taking credit
20.0
for the recent rally.
DIS shares rose 2.1
percent following
$0 0.0
the WSJ report on Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24
Oct. 6, 2023 that Volume (in millions) Price
Trian was planning

Source: Bloomberg
March 21, 2024
Prior to Oct. 6, 2023, over the past two years, the time period which includes the Operational Performance
headlines about the settlement with Third Point, Trian's initial campaign, and The Historical Performance—Financial Metrics chart on p. 8 highlights some of
Iger's return as CEO, the top three one-day high-volume moves occurred follow- the challenges the company faced during the pandemic, as well as the rise in
ing the 4Q FY22 earnings release (down 13.2 percent), following the 2Q FY23 leverage and deterioration in return metrics since 2019. However, the compa-
earnings release (down 8.7 percent), and on Nov. 21, 2022 (up 6.3 percent on 4x ny's segment reporting (see following page) provides a clearer view of the com-
volume), the day after the announcement that Iger was returning as CEO. Note, pany's operational performance.
however, that the initial media reports of Trian's stake and potential activism
(preceding last year's campaign, ($ in millions)
which was subsequently with- FY18 FY19 FY20 FY21 FY22 FY23
drawn) also came out on that day. Revenues
Combined, these data and the chart Entertainment $35,401 $45,340 $48,350 $50,866 $39,569 $40,635
below suggest that recent share % of total 59.6% 65.1% 73.9% 75.4% 47.8% 45.7%
price rally can be primarily attribut- Sports NA NA NA NA 17,270 17,111
ed to the company's earnings re- % of total NA NA NA NA 20.9% 19.2%
Experiences 24,701 26,225 17,038 16,552 28,085 32,549
ports and announcements.
% of total 41.6% 37.7% 26.1% 24.6% 34.0% 36.6%
TSR-Conclusion Eliminations (668) (1,958) - - (1,179) (1,397)
Content License Early Termination - - - (1,023) -
DIS TSR through the unaffected
Total Revenues $59,434 $69,607 $65,388 $67,418 $82,722 $88,898
date has markedly underperformed
the company's own sole yardstick Segment Operating Income
for measuring its overall financial Entertainment $9,594 $8,089 $7,653 $4,216 $2,126 $1,444
performance, the S&P 500 Index. % of total 61.2% 54.5% 94.4% 34.8% 19.4% 11.5%
Performance versus ISS peers cho- Sports NA NA NA NA 2,710 2,465
sen for this analysis has been % of total NA NA NA NA 24.7% 19.7%
mixed, although not as alarming as Experiences 6,095 6,758 455 7,905 7,285 8,594
% of total 38.8% 45.5% 5.6% 65.2% 66.5% 68.7%
Trian's and Blackwells' analysis sug-
Content License Early Termination - - - - (1,159) -
gests. The company slightly under-
Segment Operating Income $15,689 $14,847 $8,108 $12,121 $10,962 $12,503
performed its peers in the five-year
period, and outperformed in the Source: Company filings
three year period. However, the underperformance widened substantially in the Note that DIS has reorganized its segments several times over the past few
one-year period though the unaffected date. Extending the analysis through years, which creates some bumpiness in reconciling past results. The most sig-
March 15, 2024 shows an improvement in both absolute and relative perfor- nificant change in FY23 was breaking out ESPN, which was previously primarily
mance, which appears to have been driven primarily by the two latest earnings in the Linear Networks subsegment of Entertainment, with a small portion in
releases and announcements made on those days. the DTC subsegment. In addition, the reorganization of business units into
March 21, 2024
three content groups and a distribution group under Chapek's leadership in 2020 tar: The Way of Water. However, the Content Sales/Licensing subsegment,
moved around some components among subsegments. Prior to that, another ma- which also includes TV/VOD and home entertainment distribution, reported an
jor change was after the launch of the streaming service, when the company sep- operating loss of $170 million, compared to operating income of $352 million in
arated DTC from international linear networks. Other changes within the last five FY22. By comparison, in FY19, theatrical distribution revenues were $4.7 billion
years include combining Parks & Experiences with Consumer Products in FY19 and and the subsegment (Studio Entertainment) reported operating income of $2.7
the reporting of intersegment revenue eliminations. With every such change, the billion. This highlights some of the recent challenges with the studio business
company restates the prior year's results, but does not go back farther historical- with a significant revenue decline since FY19, as well as profit losses in FY23.
ly, which makes a longer view of segment results more difficult to obtain.
DTC
The five-year period examined by ISS analysis also includes the Fox acquisition in Disney+ was launched in the U.S. and four other countries in November of
March 2019 (half-way through FY19). Through this transaction, DIS acquired the 2019. During an analyst day in the summer of 2019, the company disclosed that
film and television studios, FX and National Geographic, international television it expected Disney+ to have between 60 million and 90 million subscribers glob-
businesses (including Star), and 30 percent of Hulu, which increased DIS' owner- ally by the end of FY24. At the same analyst day in 2019, the company also stat-
ship to 60 percent (subsequently increased to 67 percent in May 2019). This ac- ed that it intended to invest aggressively in original content. It guided to cash
quisition somewhat conceals the true state of the Entertainment segment in investment in original content of approximately $1B in FY20, ramping up over
FY20, further complicated by the fact that the company began consolidating Hulu time to reach mid-$2B range in FY24. Based on these expected cash invest-
results given its majority ownership. While the rise in DTC revenues the following ments, the company estimated that the amortization expense flowing through
year offsets the decline in linear networks, the significant drop in operating in- the P&L would be less than $500 million in FY20, growing to approximately $2B
come within that segment reflects the additional challenges that were brought on in FY24.
by the acquisition (in addition to the rising investments into DTC content).
Notwithstanding some of the confusion and inconsistencies of information stem-
ming from the multiple segment reorganizations, Fox acquisition, and the COVID
disruptions, the big picture is clear. The Experiences segment has remained the
most stable and resilient within the company and, as a result, accounted for 68.7
percent of segment operating income in FY23, up from 38.8 percent in in FY18.
Linear networks have been on a steady decline, with a 9 percent YOY decrease in
revenue just in FY23 alone, driven by a 5 percent decline in affiliate fees and 15
percent decline in advertising. ESPN, while also in a decline in linear networks,
appears to be more stable, with a 2 percent decline and 10 percent decline in
affiliate fees and advertising, respectively. DTC has grown subscribers and reve-
nues at a rapid pace, but has not been profitable due to rising costs, as discussed
in more detail below. Theatrical distribution can be volatile YOY depending on the
success of the movies during the years compared. In FY23, theatrical distribution
revenues increased 69 percent YOY to $3.2 billion due to the performance of Ava- Source: Company filings
March 21, 2024
The pandemic drove subscription growth well above the company's initial projec- and $9 billion in FY24. Cash content guidance for FY22 and FY23 was $20 billion
tion – in fact, the company reached over 60 million subscribers by the end of and $30 billion, respectively.
2Q20, reported in May of 2020, six months after the launch. Understandably, this
At the FY22 earnings call in November 2022, the last earnings call before
drew questions during that earnings call on whether the company would achieve
Chapek's departure later that month, the company appeared to indicate that it
profitability in the DTC segment faster than initially expected. Chapek responded
may not reach profitability in DTC for full fiscal year FY24. Three months later,
that the company was not prepared to update its guidance and would not give
on Iger's first earnings call following his return, he acknowledged that the com-
projections on when DTC would reach profitability.
pany had been too focused on gaining new subscribers rather than on profita-
At an analyst day in December 2020, the company made it clear that it intended bility and promised "to take a really hard look at the cost for everything that we
to reinvest the revenues it was generating above its initial expectations to aggres- make both across television and film" and at the volume, adding that the com-
sively invest into content. The company announced that over the following few pany had "an opportunity, through more aggressive curation, to reduce some
years, it planned to release roughly 10 new Marvel series, 10 new Star Wars se- of our costs in the general entertainment side and in general in volume." In ad-
ries, 15 new Disney live-action, Disney animation and Pixar series, and 15 new dition to content spend, Iger also addressed pricing, promotion, and marketing.
Disney live-action, Disney animation and Pixar features, all directly on the stream- At the most recent investor conference in March of 2024, Iger also stated that
Chapek's separation of the creative side from distribution resulted in a lack of
accountability.
Recent Announcements
Since Iger's return as CEO, a number of initiatives have been announced to ad-
dress some of the operational challenges over the prior five years and reverse
decisions and actions taken during Chapek's CEO tenure. On the first earnings
call since Iger's return, on Feb. 8, 2023, Iger announced that the company was
unwinding the separation of distribution and content creation and reorganizing
into three segments – Entertainment, Sports, and Parks & Experiences. Iger
also announced a company-wide $5.5 billion cost reduction plan. This consisted
of reducing annualized non-content-expenses by roughly $2.5 billion, with 50
percent targeted in marketing, 30 percent in labor, and 20 percent in technolo-
gy, procurement and other expenses. As part of this initiative, DIS stated that it
would cut 7,000 jobs. In addition, the company announced that longer term, it
was looking to realize additional efficiencies in content spending, with an annu-
alized savings target of $3 billion of future spending outside of sports. Note
Source: Company filings that it was following this announcement that Trian suspended its initial cam-
paign in 2023.
ing service. The management expected that by the end of FY24, Disney+ Subsequently, between September 2023 and February 2024, the company an-
(including HotStar) would reach between 230 and 260 million subscribers globally. nounced a number of additional updates and strategic decisions, beginning
The updated guidance included content expense to grow to between $8 billion with the announcement at an investor day in September 2023 that it would
March 21, 2024
double the investment into Parks & Experiences over the next 10 years compared pany both by the sell-side and by the financial media. The business trends and
to the previous approximately 10-year period to $60 billion, followed by the an- the issues documented above, as well as by Trian and Blackwells, appear to be
nouncement of the appointment of Hugh Johnston as CFO in early November. On widely known and not disputed. These include the acknowledgment that finan-
the 4Q FY23 earnings call in November, the company raised its guidance for the cially the Fox acquisition was value destructive, that the secular decline in line-
cost reduction plan to $7.5 billion, provided FY24 cash flow guidance of $8 billion ar networks is an ongoing challenge that needs to be addressed, that the costs
(versus consensus expectations of $6.6 billion), announced the launch of a unified within DTC got out of control, that the studio business has underperformed
Disney+ and Hulu app domestically following Comcast's exercise of the put option relative to the decade prior to the pandemic, that Parks and Experiences has
on its stake in early November 2023, and articulated long-term objectives for each been a bright spot in earnings and requires ongoing investments to maintain its
of its businesses. strength, and the challenge of minimizing cannibalization while gradually tran-
sitioning ESPN to DTC to address the secular decline in linear networks.
The objectives, which are set as guidance for making decisions, rather than spe-
cific financial goals, are: achieving significant and sustained profitability in the The actions taken since Iger's return and the strategic plan articulated by the
streaming business; building ESPN into the preeminent digital sports platform; management, while somewhat scant on specific guidance, appear to have given
improving the output and economics of the film studios; and turbocharging investors some reassurance that these issues are being addressed. The cost
growth in the Experiences business. Approximately three weeks later, DIS an- cuts are an important first step and are helpful to sentiment as they can start
nounced that it was reinstating dividend payments, which had been suspended flowing through P&L more rapidly than other initiatives, as evidenced by the
during the pandemic. In February 2024, there were multiple additional announce- latest two positive earnings surprises. This initial effect could be short lived if
ments made in conjunction with the 1Q FY24 release and in separate press releas- the other issues are not solved; however, there is clear faith in Iger given his
es, including: a sports streaming JV with Fox and Warner Bros, the planned launch track record, which alleviates these doubts.
of standalone ESPN streaming option in the fall of 2025, an equity stake in Epic Corporate Governance
Games, a $3 billion buyback program, and a formation of a JV with Reliance.
DIS' underwhelming TSR and operational performance since 2019 was in many
As discussed in the TSR section, over the past approximately six months through
ways driven by industry-wide disruptions, but was also partially self-inflicted, as
March 15, 2023, DIS shares have rallied by over 30 percent, including 6.9 percent
admitted by the company, and evidenced by the fact that many of Iger's an-
and 11.5 percent one-day moves following the releases of 4Q FY23 and 1Q FY24
nouncements since his return reverse decisions made during the prior two-year
earnings, respectively, when most of these announcements were made. During
this period, consensus estimates for FY24 and FY25 EPS have increased by approx- period.
imately 9 percent and 4 percent, respectively, and FY24 and FY25 EBITDA esti- One of the key events that led to what the company now acknowledges to be
mates have increased by approximately 3 percent. Over the same period, P/E and strategic mistakes was the appointment of Chapek to succeed Iger in early
EV/EBITDA multiples expanded from 20.1x to 24.2x and from 11.0x to 12.9x, re- 2020. The events leading up to that decision appear to point to multiple missed
spectively, according to Bloomberg data, reflecting an improvement in investor opportunities by the board to avoid this failure. The board first signaled that it
sentiment.
intended to ensure a smooth CEO transition in 2011, when it announced the
Operational Performance - Conclusion extension of Iger's employment to March 31, 2015. While Iger's contract was
Operational performance over the past five years shows deterioration in margins, extended twice during that period, one of his responsibilities was to assist the
free cash flow, and return metrics, as well as increased leverage. While some of board in finding his successor and prepare that person for the eventual transi-
the challenges have been driven by the industry disruption, which was accelerat- tion. Ultimately the choice came down to Jay Rasulo and Tom Staggs. Staggs
ed by the pandemic, some appear to be self-inflicted. DIS is a well-covered com- was appointed COO, which historically in the company meant that he was the
March 21, 2024
heir apparent to succeed the CEO. However, Staggs left a year later. During en- Today, there appears to be little or no debate that some of the decisions made
gagement with ISS, Iger explained that during Staggs' year as COO it became ap- during Chapek's tenure were not strategically sound, as evidenced by public
parent that he was not the right person for the CEO job. The departures of Rasulo statements by Iger and the fact that multiple actions taken since Iger's return
and Staggs following what had been a five-year trial of finalist successors at that are simply reversals of Chapek's initiatives. These include the reorganization
point should have signaled to the board that it needed to take a more active ap- separating the creative team from the content distribution team, the hiring of
proach in supervising this pro- 3,700 people in the mon-
cess. Instead, it appears to have etization team, and the
continued to delay grooming of a rising DTC costs, among
successor (through ongoing ex- others. During engage-
tensions of Iger's contract) and ment with ISS, the board
expecting a better outcome from stated that while it saw
an unchanged process. It is worth red flags with each of
noting that Staggs was recently these decisions, it be-
hired as a consultant to the com- lieved that it should give
pany, which raises questions Chapek a chance to prove
about the decision made in 2016 out his strategy, and that
that he was not the right person, with the information
as he clearly remains valuable to available at the time and
the company. the uncertainty surround-
ing the industry disrup-
Chapek's sudden appointment at
tion and the pandemic,
the onset of the pandemic was
evaluation of those deci-
not a result of a rigorous process,
sions was more difficult.
by the board's own admission
during engagement with ISS. It Although the company
appears that there was no struc- was operating in an un-
tured board-mandated interview certain environment, it is
process, and that the board pri- unclear what actions the
Source: Company filings
marily relied on Iger's judgment board took to evaluate
in making this decision. During engagement with ISS, the board also mentioned Chapek's decisions. While Chapek may have underestimated the importance of
that following Chapek's appointment, it was encouraging him to build a relation- giving the creative team the full range of decision-making, the board had the
ship with the creative team, which begs the question of why somebody who was institutional knowledge of the importance of the creative team to the company
being considered as a contender to succeed Iger hadn't been working on those and should have intervened. Similarly, the board appears to be dismissive of
relationships well before the transition. the notion that NFLX could be used as a benchmark for the DTC business; how-
March 21, 2024
ever, despite the many differences between the two businesses, a rigorous analy- sumed executive chairman roles at Morgan Stanley, Nike, and Sky, respectively,
sis of NFLX's offerings, strategy, technology, licensing agreements, and content at the time that they stepped down as CEOs.
creation cadence may have been useful in guiding DIS' DTC strategy, but does not
Putting aside the issue of succession, the two most recent additions to the DIS
appear to have been undertaken by the board. Finally, the sudden firing of
board are logical choices. Gorman will undoubtedly be additive in evaluating
Chapek less than five months after extending his contract and the circumstances
the expected returns of DIS' future investments and Darroch's leadership of a
surrounding the announcement of Chapek's departure and Iger's return appear to
media conglomerate is certainly relevant to DIS.
indicate that the board was caught by surprise about the state of affairs at the
company. ISS Conclusion: Is Change Warranted?
Of the 11 independent directors standing for election, six were on the board DIS has faced multiple operational challenges over the past several years. The
media industry has been undergoing a long-term secular shift away from cable
when Chapek was appointed in early 2020 – Chairman Mark Parker, Mary Barra,
television into streaming, a trend accelerated during the pandemic. The compa-
Safra Catz, Michael Froman, Maria Elena Lagomasino, and Derica Rice, with Lago-
ny has also faced numerous pandemic-related obstacles, which negatively
masino the longest-tenured, having served on the board since 2015. The remain- affected all parts of its business, including park closures and constraints after
ing five independent directors have joined the board within the last two years, reopening, suspension of sports events, production delays, and a drop in
including most recently, James Gorman and Jeremy Darroch. It should be noted, attendance at movie theaters, among others. Nevertheless, as a global diversi-
however, that Carolyn Everson was appointed as a result of a settlement with fied business, DIS should have had the ability to maintain stability in its financial
Third Point, and Gorman and Darroch joined as the proxy battle with Trian was performance through disruptions. Despite this advantage, DIS has significantly
heating up. Nevertheless, the additions of Gorman and Darroch, in particular, ap- underperformed the S&P 500 over the one-, three-, and five-year periods
pear to have added relevant and needed skills and experience. Darroch, the for- through Oct. 6, 2023, the last trading day before the Wall Street Journal report-
mer Group CEO of Sky, brings extensive media experience, while Gorman, who ed that Trian was preparing to run a proxy fight at the 2024 AGM. DIS' perfor-
has just concluded his own succession process at Morgan Stanley, will most likely mance relative to its peer group is better than relative to S&P, but still shows
be able to draw on recent experience to contribute to DIS' process. underperformance in the five- and one-year periods through the unaffected
date.
However, the success of Gorman's CEO transition at Morgan Stanley remains to
be seen. Ted Pick's appointment as Morgan Stanley CEO was made on Oct. 25, Operational performance over the past five years shows deterioration in mar-
gins, free cash flow, and return metrics, as well as increased leverage. The busi-
2023, and he only assumed office in January 2024. Since then, MS shares are
ness challenges and trends identified by ISS analysis have been widely covered
down 5.9 percent (as of March 15, 2024), significantly underperforming almost all
by the financial press and have been highlighted by both dissidents. Those in-
other major banks over this period (on a five-year basis, MS significantly outper-
clude the acknowledgment that financially the Fox acquisition was value de-
formed its peers). As a recent addition to the DIS board, Gorman will have to gain structive, that the secular decline in linear networks is an ongoing challenge
an understanding of the company's culture and business lines in order to assess that needs to be addressed, that the costs within DTC got out of control, that
which candidate is most likely to succeed as CEO. We also note that two of the the studio business has underperformed relative to the decade prior to the
four members of the succession committee (Parker and Barra) are long-tenured pandemic, that Parks and Experiences has been a bright spot in earnings and
members of the board, and therefore accountable for the failed (or inexistent) require ongoing investments to maintain its strength, and the challenge of
process in 2020. It is also worth noting that Gorman, Parker, and Darroch all as- transitioning ESPN to DTC to address secular decline in linear networks. While
some of the challenges have been driven by industry disruption, as well as the
March 21, 2024
pandemic and its aftereffects, some appear to be self-inflicted. Many of the deci- that such action was overdue, and perhaps could have been avoided altogether
sions taken during Chapek's tenure as CEO in particular are now acknowledged by had the board conducted more robust due diligence.
the board to have been Chapek's and its own strategic mistakes.
By definition, the decision to ask a former CEO (especially one who indicated it
Since Iger's return as CEO, a number of initiatives have been announced to ad- was time for him to retire) to return to the company to replace a successor
dress some of the operational challenges over the prior five years and reverse a whom the board did not adequately vet is evidence of a critically flawed suc-
number of decisions and actions taken during Chapek's CEO tenure. Although cession process. In DIS' case, shareholders paid a steep price. The board may
shares continued to underperform initially after Iger's return, over the past ap- argue that Iger was the only logical choice to lead the turnaround; this is a valid
proximately six months, DIS shares have rallied by over 30 percent, including 6.9 point, but one has to wonder where the company would be had Iger not been
percent and 11.5 percent one-day moves following the releases of 4Q FY23 and available, or willing, to return.
1Q FY24 earnings, respectively. Iger's turnaround plan, while somewhat scant on
Individually, all members of the DIS board are highly accomplished individuals
specific guidance, may have reassured investors that these challenges are being
with relevant experiences and business insights. Yet, collectively, the board fell
addressed.
short on two key matters: cultivating a successor to Iger, and preventing
Nevertheless, the key decision points that led to the company's challenges over Chapek from veering off course after he was appointed. Therefore, the ques-
the past five years, not to mention multiple activist campaigns, can be traced to tion for shareholders is not whether the CEO should be replaced, but whether
the board. The most obvious of these was the failed succession in 2020, for which the board, having failed to properly oversee the last succession process, is ca-
the board admittedly did not follow the process it has outlined for the current pable of avoiding the same mistakes. Equally important is the question of
succession strategy. How the board became comfortable with Chapek, who by all whether the board, which includes several CEOs of companies undergoing their
accounts lacked the creative vision that seems so integral to success at DIS, is puz- own periods of delicate transition, can oversee the next CEO more closely, and
zling; ultimately, the obvious conclusion is that the board simply trusted Iger's provide more detailed and explicit guidance to prevent her from making mis-
judgment without conducting more rigorous due diligence. takes as costly as Chapek's.
Hindsight is undoubtedly 20/20, and the market's decision to overly reward The decision to bring Iger back was the right one given his track record, as well
streaming customer growth at the beginning of the pandemic may have muddied as investors' confidence in his understanding of the business and decision-
the waters by temporarily boosting the stock price as Chapek led the company making related to company strategy. Some of the initiatives he undertook have
out of the pandemic. Yet, Chapek seems to have taken enough wrong turns dur- already driven an improvement in financial performance, and the recent an-
ing his tenure (at least by the board's own assessment) that a more engaged nouncements appear to have driven an improvement in investor expectations
board should arguably have recognized these issues sooner. Several of Chapek's and sentiment. While it is clear that Iger is the right CEO for DIS at the moment,
major decisions – including expanding streaming content at the cost of diluting there are lingering questions about the board's ability to properly oversee the
quality, severing the bridge between artistic and financial decisions (including the next CEO transition, whether it happens in 2026 or in later years, and the sig-
hiring of 3,700 new heads in the process), and failing to effectively navigate the nificant strategic changes the company is undertaking, particularly given the
political controversy in Florida – have been criticized by Iger, who has reversed ongoing challenging industry environment. The importance of executing a suc-
many of them. When asked about Chapek's decisions during engagement with cessful succession plan, particularly for a company of this complexity, and the
ISS, the board repeatedly stated that it spotted "red flags" along the way, and that board's prior failure to properly oversee this process, suggests that some level
Chapek even failed to heed direct advice from the board. Ultimately, the board of change at the board level is warranted.
fired Chapek despite having renewed his contract only five months before. Alt-
Considerations Relating to a Multi-Activist Hollywood Campaign
hough the board believes it took swift action when needed, many investors feel
March 21, 2024
This is an unusual contest in that it involves an iconic global company, closely Of note, Blackwells' confidence in the value that could be unlocked at DIS does
scrutinized and widely covered by media, and a CEO who can be characterized as not seem to have translated into a substantial investment in the company, de-
a celebrity thanks to his successful track record at this company, the glamor asso- spite the fact that some of the initiatives it suggests carry a certain degree of
ciated with the job, and his own published autobiography. Trian and Blackwells, risk, such as the real estate separation. In the backdrop of all this, Blackwells
which are both nominating candidates at the 2024 AGM, as well as ValueAct, has reportedly planned a campaign targeting Wendy's – whose board includes
which reached an information sharing agreement, have been active in the press three members of Trian. These inconsistencies make it hard to ascertain Black-
and at investor events. Both DIS and Trian have received public endorsements wells' precise intention with this campaign.
from other business world celebrities. DIS has received public endorsements from
Ultimately, Blackwells’ critique mirrors Trian's in several regards. During our
the grandchildren of Walt and Roy Disney, from Jamie Dimon, and from George
discussions with the board, it also became apparent that the company has in
Lucas, with all parties specifically endorsing Iger although he is not targeted by
fact adequately considered many of the areas of improvement suggested by
any of the activists. Trian's campaign has received public support from Elon Musk
Blackwells. In light of these factors, along the inconsistencies noted above, our
and activist fund Ancora.
analysis focuses primarily on Trian's case for change.
While investors need to consider each of the five dissident candidates on the uni-
Blackwells has nonetheless nominated candidates that deserve consideration.
versal card (two from Trian and three from Blackwells), the campaigns run by
As a result of the universal proxy card, investors are able to support candidates
each activist, as well as the presence of ValueAct, provide some context narrow-
from any slate, regardless of whose case for change they find most compelling.
ing down the choices.
Blackwells Campaign
The fact that four activist funds have engaged the company in recent years is
proof that DIS has faced obvious difficulties on multiple fronts, and over a pro-
longed period. Blackwells’ decision to launch a parallel contest is not entirely sur-
prising, though its campaign has followed an inconsistent arc, starting with its
criticism of Trian's campaign, followed by comments largely interpreted as sup-
portive of the DIS board. Blackwells then pivoted to calling out the lack of specific
expertise on the board, and nominating three candidates, outnumbering Trian's
own effort by one candidate.
During the course of its campaign, Blackwells dedicated an entire investor presen-
tation to questioning ValueAct's agreement with DIS. In response to an inquiry
from ISS regarding Blackwells’ allegations, ValueAct has clarified that it no longer
manages assets on behalf of the DIS pension, and that the DIS pension plan fully
redeemed before ValueAct built its stake in the company. This is consistent with
the board's indication, during engagement with ISS, that DIS' pension plan has
recently moved away from actively managed (including Trian) to passive funds.
ValueAct also indicated that although its investment team met with Bob Iger on
very limited occasions in the years prior to its investment in DIS, Mason Morfit
and Bob Iger do not have a personal relationship.
March 21, 2024
no recommendation regarding the 10 management nominees whom it has not

2. WHICH NOMINEES? targeted.
DIRECTOR NOMINEES Blackwells Nominees
Trian Nominees Blackwells is nominating three candidates to the board. As it has also put
forward a proposal to increase the board's size by three members, it is not
Trian has targeted the following two incumbents for removal from the 12- targeting specific incumbent directors in its campaign. However, Blackwells
member board: recommends that shareholders withhold votes from each of the 12
Michael B.G. Froman, 61, has been a director since 2017. He has been the management nominees, as well as the two Trian nominees.
president of the Council on Foreign Relations since 2023. From 2018 to Craig Hatkoff, 69, has been the chairman of Turtle Pond Publications LLC
2023, Froman was a vice chairman of Mastercard Incorporated, and from since 2002. He is a director at SL Green Realty Corp. (SLG) and
2013 to 2017, was the United States Trade Representative. Captivision Inc. (CAPT). Hatkoff previously served as a director at
Maria Elena Lagomasino, 74, has been a director since 2015. She has been Subversive Capital Acquisition Corp. (SVX.U), DigitalBridge Group Inc.
the CEO of WE Family Offices since 2013. From 2005 to 2012, Lagomasino (DBR), Taubman Centers Inc. (TCO), and Blackstone Mortgage Trust Inc.
was the CEO of GenSpring Family Offices, an affiliate of SunTrust Banks. (BXMT).
She was previously a director of Avon Products Inc. (AVP) and is currently a Jessica Schell, 49, founded Observatory Group LLC in 2023. From 2014 to
director of The Coca-Cola Company (KO). 2023, she was general manager of Warner Bros. Home Entertainment.
Trian has nominated the following two candidates to replace them: Between 2010 to 2014, Schell worked in EVP roles at Universal Pictures.
Nelson Peltz, 81, is the CEO of Trian Management, which he founded in 2005. Leah Solivan, 44, is a managing director at Fuel Capital L.P., a venture
He is currently a director of Unilever plc (UL), Madison Square Garden capital firm, where she has worked since 2017. She founded TaskRabbit
Sports Corp. (MSGS), and Wendy's (WEN). Peltz previously served as a in 2008 and served as its CEO until the company's sale in 2017.
director of H. J. Heinz Company (HNZ), Ingersoll-Rand plc (IR), Legg Mason
Inc. (LM), MSG Networks Inc. (MSGN), Mondelēz International Inc. (MDLZ),
DISSIDENT NOMINEE COMPENSATION
Sysco Corporation (SYY), The Proctor & Gamble Company (PG), Invesco Ltd. The Trian proxy statement states that Rasulo will receive $125,000 as
(IVZ), Janus Henderson Group plc (JHG), Triangle Industries Inc. (TRIA), and compensation for serving as its nominee. He has agreed to purchase company
Trane Technologies plc (TT). shares with the after-tax proceeds of this payment.
James A. Rasulo, 68, is an independent advisor to start-ups and emerging The Blackwells proxy statement indicates that its nominees will not receive
companies. He served in various roles at the company from 1986 to 2016, compensation for serving as nominees.
most recently as its CFO. Rasulo is currently a director of iHeartMedia Inc.
(IHRT). He was previously a director of Saban Capital Acquisition
Corporation (SCAC) and Euro Disney SCA (EDL).
Trian also recommends that shareholders withhold votes from Froman and
Lagomasino, as well as the three Blackwells nominees (see below). Trian makes
March 21, 2024
ANALYSIS fueled controversy, particularly as it relates to the role of Perlmutter, who the
company and others say may cast a baleful shadow over the board should Peltz
The above analysis suggests that incremental change is needed at the company be elected. The board asserts that Perlmutter's dislike for Iger is at the heart of
due to multi-year underperformance of the company's peers and chosen this contest; Trian argues that Perlmutter is only an investor in its fund and
benchmark, operational challenges, and most critically, a repeated failure on the does not dictate its actions. By most accounts, his separation from DIS was well
part of the board to oversee the cultivation of a successor to Iger. warranted, as his clashes with other executives are well documented. As such,
The board comprises well-qualified and accomplished directors, does not lack a Perlmutter's direct involvement (he is listed as a participant in the solicitation)
key skill set, and, as highlighted by both dissidents, does not lack for CEOs of is an unfortunate distraction, and it makes it difficult to fully fault DIS for its
major companies who well understand the role of effective directors on a high- defensive posture.
functioning board. However, the events leading up to the CEO transition in 2020 Absent direct shareholder representation on the board and presented with a
and the strategic missteps taken over the past several years appear to indicate dissident campaign that has generated some controversy, shareholders must
that the board is not functioning in the most optimal way. With that in mind, a necessarily assess the available candidates to determine whether the addition
shareholder representative who is well versed in the imperative to hold of a dissident nominee would be a net positive.
management to account would be well positioned to provide the catalyst that this
board apparently needs to improve its effectiveness. While all directors must act In ISS' engagement, dissident nominee Rasulo came across as levelheaded and
in the interests of all shareholders, the nexus between a poor board decision and demonstrated no sign of resentment or ill will towards Iger; he has also never
shareholders' financial interests may be qualitatively more acute for a large worked with the current board members. His knowledge of DIS' operations,
shareholder who also represents their own interests and those of their investors though perhaps dated, still appears to serve as a solid basis for understanding
to whom they are also directly accountable. the company's current situation. Having said that, Rasulo's main exposure was
to the company's parks, arguably one of the least concerning segments of the
In this regard, it seems that DIS may have missed the opportunity to put this business at present. Though we do not have any concerns about his ability to
contest to rest by not bringing ValueAct's Morfit onto the board in advance of this serve as an objective director, we recognize that Rasulo's potential presence
AGM. ValueAct has a comparable investment in DIS to Trian, and Morfit has might create added friction on the board, especially since Rasulo was seen as
public board experience in media and tech, including with succession processes. Perlmutter's choice as Iger's successor.
Though the defensive appointment of a more "collaborative" activist in advance
of a contest is not always a compelling fix, in this case it might have been a useful Despite Trian's explicit assertion that it does not seek to remove Iger, or seek
tactic. Should the company defeat Trian at the polls, the vote results could still an executive role for Rasulo, the board, which firmly believes Trian's campaign
inform the board’s view as to whether direct shareholder representation should is fueled by Perlmutter's animus towards Iger, has argued otherwise, going so
be reconsidered down the line. far as to suggest during our engagement that Peltz might even seek to appoint
a family member as DIS' future CEO. Not only do we find Trian's stated
Trian represents significant share ownership and has presented a detailed case comments to be sufficiently unambiguous on this topic, but we also find the
for change and a clear set of goals for the board to consider. While the company notion that Trian would put its investment at risk by seeking Iger's premature
argues that its existing turnaround plan already addresses most of Trian's ouster difficult to believe. Moreover, the notion that Trian, with at most two
suggestions, Trian's most significant contribution would be a focus on seats on the board, would be able to hijack DIS' succession process, seems
accountability and a shareholder perspective. With that said, Trian's campaign has nonsensical.
March 21, 2024
Among the dissidents' five nominees, Peltz, with his considerable experience on
other boards and fiduciary duties owed to a large shareholding group, appears
best positioned to bring a shareholder perspective to the board.
Neither director targeted by Trian possesses a skill set that is not possessed by a
board member, or that could be provided by a specialized consultant were a short
-term need to arise. As the longest-serving independent member of the board,
Lagomasino bears more responsibility than any other serving nominee for the
failure of the Staggs/Rasulo "bake-off," the failure to cultivate a readily apparent
successor to Iger following Staggs' departure, and again following Iger's re-entry.
The heir apparent to a CEO role at an iconic consumer-facing American company
necessarily faces intense investor, board, and media scrutiny. That the board has
not seen fit to put anyone in this position since the departure of Staggs in the first
half of 2016 represents as close to a single-issue indictment of a board's
performance that one could imagine. During her time on the board, Lagomasino
has chosen to support four extensions of Iger's tenure as CEO, yet along with her
shorter-tenured independent fellow directors, has not yet named a CEO
successor. As a member of the compensation committee since joining the
company (and as chair of the committee since 2019), Lagomasino oversaw
consecutive years of problematic compensation decisions, resulting in significant
shareholder opposition, which the committee failed to promptly address. Despite
actions taken in recent years, as of 2023 shareholder support for DIS’ say-on-pay
remained below the median support for S&P 500 companies. (Lagomasino also
served as a member of the compensation committees at Coca-Cola and Avon,
where shareholder discontent with executive compensation was also evident at
times.) As DIS' longest tenured independent director and a member of the
nomination and governance committee since 2019, she arguably bears more
accountability than most for the failed succession process prior to Iger's decision
to step down in 2020.
March 21, 2024
CONCLUSION AND VOTE

RECOMMENDATION
Because the company has made positive changes to its board as well as
operational changes that have been well received by the market, we recognize
that some shareholders may feel that the company has sufficiently course
corrected. These investors have likely drawn comfort from Iger's return.
Nonetheless, given the major missteps and severe consequences of the failed
2020 succession, particularly for a company that already had a history of
succession drama, it may be difficult for others to simply trust that the board,
albeit refreshed, will get it right this time. These shareholders may be concerned
about post-Iger DIS. Our analysis favors this latter view.
Dissident nominee Peltz, as a significant shareholder, could be additive to the
succession process, providing assurance to other investors that the board is
properly engaged this time around. He could also help evaluate future capital
allocation decisions. Moreover, multi-year concerns surrounding Lagomasino's
role as a compensation committee member strengthen the case that Peltz's
addition, on balance, would appear a net positive.
Shareholders are recommended to vote FOR Nelson Peltz on Trian's proxy card,
and WITHHOLD votes from Trian nominee Jay Rasulo, Blackwells nominees Craig
Hatkoff, Jessica Schell, and Leah Solivan, and WITHHOLD votes from management
nominee Maria Elena Lagomasino. Shareholders are advised to support the
remaining management nominees.
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The Walt Disney Company (DIS) Proxy Contest With Trian and Blackwells

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The Walt Disney Company (DIS) Proxy Contest With Trian and Blackwells

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ISS SPECIAL SITUATIO NS RESEARCH

3-YEAR TOTAL SHAREHOLDER RETURN

5-YEAR TOTAL SHAREHOLDER RETURN

HISTORICAL PERFORMAN CE—FINANCIAL METRICS

BACKGROUND KEY EVENTS

Feb. 1, 2005: Company states that it will announce a successor to Eisner as

Feb. 11, 2005: Company holds its 2005 annual meeting.

ANALYTIC FRAMEWORK 1. IS CHANGE WARRANTED?

Oct. 6, 2023 that Volume (in millions) Price

Trian was planning

no recommendation regarding the 10 management nominees whom it has not

CONCLUSION AND VOTE

Further information about conflict mitigation can be found here.

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