How the Disney proxy battle is a win for impact investing and stakeholder capitalism
While shareholder activist Nelson Peltz tried to snatch victory from the jaws of defeat in his proxy fight with Disney, CEO Bob Iger secured a resounding win at Wednesday’s annual general meeting. Shareholders’ support for Disney’s slate of directors—and their rejection of Peltz and former Marvel chairman Ike Perlmutter’s effort to secure board seats for Peltz and former Disney CFO Jay Rasulo—is also a win for impact investors and those who believe companies must answer to multiple stakeholders.
From the start, Peltz and Perlmutter portrayed this proxy fight as an epic battle in the culture wars, an underdog tale of two billionaire Davids taking on a “woke” Goliath. Peltz played a curmudgeon, complaining about movies with too many women and Black people. Perlmutter walked that walk, having tried to veto such projects at Marvel before being ousted last year.
Together, they cast themselves as shareholder champions who measured good governance by stock price alone. (Additional credit to Elon Musk for his last-minute endorsement of Peltz and pledge to buy Disney stock if he won, a potentially hair-raising prospect given his strategy at Twitter/X. Shareholder activist Bill Ackman also played a walk-on role, accusing Disney of dirty tricks.)
Iger is not above reproach when it comes to governance—succession planning being Exhibit A—but he does understand that Disney must answer to its employees, customers, vendors, and other stakeholders too. With more than a third of its stock held by retail investors, according to Disney filings, a lot of those people may have a financial stake in the company, too. That means being diverse, inclusive, and a good citizen are table stakes for achieving long-term growth. As Yale’s Jeffrey Sonnenfeld and Steven Tian note, Peltz’s knack for pumping up a share price during a proxy battle has not historically increased a stock’s long-term value.
What does increase value is the kind of transformational leadership that Iger has demonstrated throughout his career. That means getting ahead of technology and consumption trends and being the kind of company where employees want to work. It's tricky to speak up on issues like abortion and anti-LGBTQ+ legislation in this polarized climate. As a major employer in Florida and a company that has targeted its products to a diverse range of customers, Disney was forced to take a public stance when Florida Gov. Ron DeSantis signed the “Don’t Say Gay” bill—spawning a two-year battle that was finally settled last week.
As an $89 billion-a-year giant, Disney can also afford to take on well-funded warriors like Peltz and DeSantis in a way that most companies can’t. The company said it spent almost $40 million just to defend its shareholder slate against Peltz.
To leadership consultant Bill Schaninger, that’s money well spent. “They have to be on the right side of history for Disney’s brand and employees,” says Schaninger, who led the global talent practice at McKinsey before becoming senior partner at Modern Executive Solutions. “In the long game, you win out as an employer and a company when you’re committed to diversity.”
Schaninger advises leaders at large public companies to double down on defending their commitment to ESG practices. In a polarizing political environment, the key is to do it in a different way. “Syndicate the risk with your board,” he says, “Engage your lead outside director in a conversation about ‘What do we stand for?’” Have those conversations with employees and large investors, reiterating core values in an arena where you don’t have to shout them at someone who’s weaponizing politics—left or right—to defeat you. And accept that being one of the biggest kids on the playground gives you a responsibility to stand up for those who can’t.
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Diane Brady
diane.brady@fortune.com
This story was originally featured on Fortune.com
