Walt Disney (DIS) is reinstating its dividend with a 30-cent per share payout for the second half of its fiscal year, signaling a recovery phase after the pandemic-induced hiatus. This decision, effective from January 10 for shareholders on record as of December 11, comes amid ongoing pressure from activist investor Nelson Peltz, who has been advocating for improved performance and the restoration of the dividend. Disney's recent actions, including substantial job cuts and a commitment to reduce annual expenses by up to $7.5 billion, reflect its strategy to adapt to the competitive streaming era. The announcement led to a modest uptick in Disney's shares in extended trading, showing cautious optimism from investors.
The move coincides with escalating tensions between Disney and Trian Fund Management, co-founded by Peltz, who is pushing for more than two board seats at Disney. This development follows the recent appointment of Morgan Stanley (MS) CEO James Gorman and former Sky TV boss Jeremy Darroch to Disney's board, a strategy perceived as a counter to Peltz’s potential challenge. The conflict seems to be deepening with Trian’s direct appeal to shareholders and Disney’s suggestion that the proxy fight stems from a personal vendetta by Ike Perlmutter, a former Marvel boss and Peltz ally, against Disney CEO Bob Iger.
Disney's performance has been under scrutiny, with its shares underperforming compared to the broader market. The reinstatement of the dividend is a part of Disney's broader strategy to regain investor confidence. Despite these efforts, Trian remains critical of the board's recent decisions, emphasizing the need for more significant changes to reverse the trend of value destruction under the current leadership.
The situation is complex, with Trian claiming ownership of approximately $3 billion in Disney stock, part of which is owned by Perlmutter, who was dismissed by Disney earlier this year and has since been critical of Iger's leadership. Disney's statement highlighted Perlmutter's significant ownership of the shares controlled by Peltz and his long-standing grievances against Iger, adding another layer to the ongoing corporate drama. As Disney aims to refocus on key areas like theme parks, ESPN’s upcoming streaming service, and studio business improvements, the unfolding boardroom battle and its implications for Disney's future strategies will be closely watched by investors and industry observers.
