Walt Disney, the pioneer animator and filmmaker, celebrates his birthday on Dec. 5, 1901. His contributions to the world of animation include iconic pictures like Steamboat Willie and Snow White and the Seven Dwarfs. These groundbreaking creations have revolutionized the movie industry. In fact, Disney films currently dominate the list of top-grossing movies, with eight out of the ten highest-grossing films of all time being Disney productions, according to Box Office Mojo.
Over the years, Disney’s stock has proven to be a solid investment. Since January 1972, the stock has returned an impressive 6,705.5% without dividends and a staggering 10,749.9% including dividends, as per Dow Jones Market Data. Amongst the stock’s yearly performances, its best year was in 1975 when it surged by 140%. Conversely, its worst year was in 1973 when it experienced a significant drop of 59%.
However, Disney’s journey hasn’t been without its challenges. In the past five decades, the stock has closed higher in 31 years and lower in 20 years. Although the stock has seen a modest 4.9% increase this year, there are concerns among investors. Issues such as recent box office performance, the costly shift to streaming, Hollywood labor disputes, strained relationships with state politicians, and ongoing boardroom debates have raised red flags.
The situation took another turn on Tuesday as Ancora Holdings Group, an investment firm and Disney shareholder, penned an open letter to fellow shareholders. In the letter, they urged the company to find a middle ground with Trian Fund Management and consider adding Nelson Peltz or a qualified nominee to the board. This move highlights the intense battle for board seats that is currently unfolding within the entertainment giant.
Disney’s legacy continues to shape the world of animation and filmmaking. As the company navigates through these complex challenges, their ability to adapt and make strategic decisions will be crucial for their continued success.
Disney Faces Shareholder Pressure for Boardroom Changes
In a recent letter, investment advisory firm Ancora expressed the need for a significant shift in Disney’s boardroom due to a period of ineffective governance, absence of succession planning, controversial actions, and dwindling value. Disney has not yet responded to this statement.
Ancora’s support aligns with Trian’s Nelson Peltz, following the board’s appointment of James Gorman, CEO of Morgan Stanley, and media executive Jeremy Darroch as new directors. Despite this move, Trian stated that Disney declined their request for board representation, including Peltz.
According to Trian, Disney’s stock has consistently underperformed in comparison to its peers and the broader market over the past decade. They also emphasized that investor confidence is low and crucial strategic concerns persist, even acknowledged by the CEO himself.
Although the addition of Gorman and Darroch is seen as an improvement from the current state, Trian believes that it will not be sufficient to restore investor confidence.
As a result of this development, Disney’s shares experienced a 1% decrease, closing at $91.12 on Tuesday, while the Dow Jones Industrial Average fell by 0.4%.
