Through shareholder activism, shareholders leverage on their meaningful ownership of a company’s stock to bring change in the corporate decision-making of the company . Several factors may lead to activism- related events, especially when shareholders note concerns that adversely impact the company’s performance or shareholder value. Therefore, in the face of questionable business practices or poor business decisions (for example) activist shareholders may seek changes that impact the company’s practices to ensure that their own interests are revered and demands followed.
Activism could be in the form of the shareholders with significant possession rights, engaging with the board directors, and fellow shareholders to advocate for their desired
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Disney, however, had been face with a “continued (8-year low) underperforming shareholder return and deteriorated operating performance” . In response, Disney decided to re-hire Bob Iger (“Iger” a former Disney CEO, who guided Disney’s spectacular growth ) as CEO to save the situation . Despite Iger’s return, Disney’s financial performance remained disappointing. Trian asserted that Disney’s situation was “self-inflicted primarily due to factors including poor corporate governance practices; poor capital allocation; and excessive costs.” Consequently, it launched proxy campaign against Disney following failed dialogues with members of the Disney Board and management …show more content…
Trian’s campaign influenced Disney to come up with a corporate restructuring strategy that addressed a host of Trian’s criticisms, including reducing costs and returning control over business units to its creative executives. Correspondingly, Disney’s shareholder value witnessed nearly 30% increase since after Trian’s challenge, which translated into about 20% gain on Trian’s investment. It continued to experience weeks of increased trading. On this basis, Trian through Peltz, called it a “win for all shareholder” ,congratulating Disney and Iger on the new “operating initiatives that dovetail with his thinking” . In my opinion, Train acknowledged its short-term win, and did not seeing the need to expend more resources in a challenge. Nevertheless, with respect to creating a sustainable long-term value, I believe Train’s nomination for a seat at the Disney’s board was more of means to get Trian’s views across with much reverence. Consequently, Trian understands that it has garnered the attention of the Disney Board (who knows Peltz is watching closely) as well as the reverence of other shareholders. This in my opinion, better positions it for a nomination call in the future if need