The Disney Showdown: Vanguard and State Street Hold the Key


In 2015, Nelson Peltz’s Trian Partners faced a decisive setback in a proxy fight against chemical giant DuPont. Back then, three influential institutional investors — Vanguard, State Street, and BlackRock — played a pivotal role in thwarting Peltz’s campaign. Today, these same heavyweights hold the keys to Disney’s fate as the company faces another proxy war, this time led by Peltz against the board that supports CEO Bob Iger.

Institutional Investors Hold Sway

BlackRock, which holds 4.2% of Disney shares, has thrown its weight behind management, according to The Wall Street Journal. T. Rowe Price and Norway’s sovereign wealth fund have also confirmed their support for the current leadership.

However, the stance of Vanguard and State Street remains unclear, making their votes crucial in determining the outcome of the proxy fight.

Trian’s Allies and Arguments

Peltz is not alone in this battle. Former Marvel chairman Ike Perlmutter has entrusted Peltz with his 33 million Disney shares, forming the backbone of Trian’s 1.8% stake. Other supporters include the New York City retirement fund, Neuberger Berman, and the California pension plan CalPERS.

Peltz’s case rests on arguments of a failed CEO succession process and Disney’s alleged distraction from storytelling in favor of social activism. He argues that his expertise could help find a second successor to Iger and improve the company’s underperforming stock.

The Battleground: Disney Shareholders

Both sides have been relentlessly courting investors through media appearances, dinners, and one-on-one meetings. However, the institutional vote will hold the greatest weight. Only 33% of Disney shareholders are considered retail investors, and their turnout rate is typically lower than that of institutional peers.

Vanguard, with its 8% stake in Disney, has the potential to influence the outcome significantly. In 2021, only 63% of Disney shareholders voted their shares, underscoring the importance of high turnout in a contested election.

Retail Investors and Proxy Advisors

Retail investors are actively being targeted by both sides. However, soliciting support from institutional investors remains a top priority.

Proxy advisors ISS and Egan-Jones have lent their support to Peltz, while Glass Lewis has recommended supporting Iger and the existing board. ISS’s partial endorsement of Peltz has given his campaign a significant boost.

The Verdict: A Pivotal Proxy War

The outcome of this proxy war will shape the future of Disney. If Iger manages to secure the backing of Vanguard or State Street, it will be seen as a strong endorsement of his leadership.

However, if Peltz wins over those key investors, it will be a clear signal that his concerns about Disney’s governance and strategy have resonated with Wall Street. The fate of Disney lies in the hands of its shareholders, and this proxy war is poised to determine the company’s path forward.