Nelson Peltz, Trian Partners founding partner, joins ‘Squawk on the Street’ to discuss the founding partner’s thoughts on Disney after losing the proxy battle for board seats.
Squawk on the Street
Squawk on the Street+ Nelson Peltz on Disney proxy battle 4/4/24
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We've died after this investor, or I think constructivist investor Nelson Pels with us now. Nelson, you listen to the interview. Are you a happy shareholder? Are you a selling shareholder for you, trying, or for Ike Perlmater? Jim, before we get started, I want to say thank you to a few people. I want to thank you to all the shareholders who voted for us. I want to thank my family and my beautiful wife, Claudia, for putting up with me through all of these campaigns. I try to do the right thing. I try and help companies do the right thing, and I'm not going to quit doing it. Now, what did you ask me, Jim? I did ask you whether you are happy with what the events are in terms of this stock price, and you will try and, or if you can speak for Ike, Ike Perlmater, stay along the stock, given the fact that there are some changes that are put through, or is this the end of this campaign, and it's time to ring the register and move on? Well, first of all, I'm not going to discuss whether we're buyers or sellers here. I hope this is not a redo of last year where we pulled out, gave management a chance, and the stock went down from roughly 120 down to 79. I hope that doesn't happen this time. Whether we stay or not, we don't make those kind of announcements. I hope Bob can keep his promises. I hope they can do all the things they assured us they were going to do, and we'll only watch and wait if they do it. They won't hear from me again. If they don't, Jim, you may be seeing me on your show next year doing this same thing again. So it's really up to management. It's up to the board. It's up to whether they do what they say they want to do, or if it's going to same old story again. Look, they've got to, they've got to get a succession plan finally in place that works. Okay, we haven't seen one going back to 2011. They began talking about succession with 13 years from them, and they haven't come up with anything. They've got to get the margins up. They've got to get streaming right. They made a lot of promises, and frankly, as a shareholder, I hope they keep them. Well, okay, so we're here in restore the magic, your document, you say Disney claims that it is, and I quote, "Turn the corner and enter to a new era, and you said it rings hollow for you." Any change, does it ring less hollow for you, given the fact that Bob Iger has came home with David Faber and talked about a number of changes that have been made already? Look, I'm willing to give them the opportunity to prove me wrong. I'm willing to give them the opportunity to do as they say. The shareholders have voted. They want to give management and the board a chance, so so be it. We will watch. Like we did last time. We pulled out a year ago February. A lot of promises were made. We hoped that they were going to keep them. They didn't. We came back. We've got a new set of promises, and I hope they keep them. And if they do, I'll be a guest on your show probably talking about a different company. But if they don't, you'll see me again, Jim. Fair enough. Any company in mind right now, that's a different company. You've got me thinking about, I know this. I can think a little forward, too. Is there anyone disappointing you that you think it might be? Jim, I've got to finish buying that stock before I can tell you who it is. All right, some mystery there. Now, let's talk about an article in the journal, which says Nelson Peltz's Disney consolation prize, a $300 million gain in a recent FT piece. The FT says Peltz likes to say that he'd rather be rich than be right. Were you rich and don't care about being right, give him the $300 million consolation prize? Well, first of all, the number is wrong. Okay. The number is dramatically wrong. We'd be better than that, Jim. How about one billion? Okay. And that sounds more like it. And the fact is that we have an obligation to our investors. Okay, we have to make returns for our investors. And then once we get on a board, that obligation moves to the board. But until we get on a board, we have to do what's right for our investors. And I think we've done right for them in terms of our investment in Disney. And that's what I say. I mean, Bob's got to take it from here. Did you, after getting ISS, were you surprised, meaning you had a proxy advisor say that you were the guy that should be on? Were you surprised that some of the index funds actually voted against? I was very surprised at that. And one has to understand why they voted against because if you look at their comments, their comments were beautiful. They were very complimentary. But at the end of the day, they checked the box and you'll have to ask them why they did it. I've got my feelings, but I'm not going to talk about it here on television, but you should ask them. I was very disappointed to say the least that after the beautiful comments and after the good meetings we had with them, they decided to vote against us. I want to be sure about this. So in other words, you met with some of the index funds. There's only a couple very large ones. Did they say that they would vote for you and then change the mind? They didn't say that. They won't tell you whether they're going to vote for you when you meet with them, but they were very, seemed very happy with our meeting, seemed very positive about the answers we gave them. I had 93 engagements. My people tell me in this Disney proxy fight, 93. You walk out of the room and you say that was a good one or that wasn't so good. We missed a couple of points. But the fact is when we walked out of the meetings with the index funds, I thought all three of them were very good. And so I was quite surprised that they didn't vote for us and basically them going one way or the other shifts these votes. And that's a big problem. So that would be what Vanguard and BlackRock did not vote for you. That's correct. And State Street didn't vote for anybody. They basically abstained. Now, one of the disputes, there are a lot of people for this is very personal. You never were seeking Bob Iger to leave the board. You did feel that there were some board members that were not as strong. People seem to think that you had a dramatic loss against everyone. I don't think that's necessarily fair. I think if there had been some index funds that had gone with you, there would have been some board members who were out. Jim, you're 100% right. I had no issue with Bob. There was a point in time that Bob and I used to meet socially. There was a point in time when Bob asked me to talk to his board, which I did after the Fox acquisition and where I thought the streaming business was going. And I did address them and for I gather they had guest speakers in it every board meeting. So I had no issue with Bob. The only issue I had with Bob was the succession plan, which again is at the feet of the board, not with management. My issue in this fight was with the board. There's always trying to personalize these things, making it into something more dramatic, making it into something that it wasn't. My issue was with the board. I don't believe the board was doing their job. That's the problem here. If they did, then they would have had a succession plan that works. They didn't. And that's basically the proof in the pudding. Did it bother you that there was very little repenting. I did not hear Bob Iger say, you know what, I personally recommended Bob Chapik. Bob Chapik did not do a good job. The board regrets that they picked Chapik. We got to do this over. We didn't handle ourselves well. Would that have mattered to you? Or is that just some sort of malice toward none charity toward all Lincolnian analysis that I'm offering? Jim, that would have been factual because what we've been told on very good sources that Chapik never even had an interview with the board directly. Now, I've been on lots of boards where we've had succession. And let me tell you, there are lots of small meetings between directors and the candidate. Lots of them. And the fact is, I had one where the candidate wound up to be CEO. And I loved the guy and was still friends. But the fact is, I couldn't vote for him because I only had one dinner with him four months before the vote with two other directors. And I said, I need more time. So the board gave me more time to be with them. I came back and was thrilled. But I was doing my job as a director. I don't think any of those directors did that. They all took Bob's word and they voted Chapik in. That's not what the responsibility of a director is. Bottom line. Understood. Now, let's talk money. There would have been a way to be able to make shareholders little richer, which is just to say, you know what? He's one guy who's been around those a lot about business. I just tell you, you know, board members, I'm not looking for board member to tell me about the movie site. You weren't either. What you wanted is success. You wanted people who had a process. You wanted a board that was not yes people because those people are actually quite good, as you have told me. Why didn't that matter? I don't understand why it didn't come down to the idea that, you know what, let's just let them on and not spend all these millions trying to stop them. Jim, you're a hundred percent right. Okay. But you know what gets into the way of boards and management? It's that awful free letter word called ego. And when you get ego out of the room, great decisions are made. When you let it come in the room and dominate, you really have big issues. And ego became a very big part of this proxy contest. If it wasn't, there would not have been a proxy contest. There is no doubt that Jay Rizzolo and I were much more capable of being positive directors on this board than some of the other people there. No question. But the ego in the room didn't allow for it. And you've seen that over and over again as I have. And once people get ego and check, good things happen. And I want to tell you, David Taylor at P&G, who they fought me tooth and nail, David Taylor never allowed his ego to get the best of him. And he and I wound up to be great friends. The company did phenomenally well. It went from the 70s to 160 while I was there. And while he was CEO. So let me tell you, the ego is the issue. Well, did they, when they spoke to David Taylor or to the chairman who was initially against you and then told me, you know what, at this point, that you were valuable, did they not get a sense that maybe you'd be valuable here, even though you weren't necessarily the guy who understood a pro. I mean, that wasn't your thing. You understood process. You understood business units. You understood how to make people accountable. That's what that was about. That's what Proctor was about. When they spoke to Taylor, did they not get that sense that you could help them? Let me tell you something. They don't want to hear what they don't want to hear. That we gave them so many people to interview, people who were against us coming on boards and then let them talk to them, call them up. We gave them dozens of people. You know how many people they called? None. They're very busy. That's what they did. They're busy people now, so I know those people. Very, very busy. Well, that's what they couldn't interview. Chapek. Well, it is discouraging. What's Jay going to do? Jay Rosulo, is he I mean, I thought he had some good Disney knowledge here. Jay has become my great buddy. Jay and I are going to work together again at some point in time. I think the world of him, I really got to know him up close as we went through this process and he is a star. He is really smart. He understands this business and he understands business. I can't thank him enough for being at my side as we went through this. Disney would be so smart if they used Jay even as an advisor. He's got so much to give, but it's that three-letter word, Jim, that stops them from doing it. Well, is that three-letter, this CEO, the biggest three-letter word that you've heard, which is ego? I mean, look, you hang around with Elon Musk who I know is against, I mean, could you do a little ego comparison? Can I tell you something? Elon is a friend of mine. I think the world of him. This guy has no ego. That may be hard for you to believe, but having spent the amount of time I have with Elon, he is willing to listen to anybody. It has the same attitude we do that will steal any good idea and be proud of it, but his ideas are beyond anything I've ever seen in my whole life. He's a brilliant guy, understands so many things about the world, and all you want to do is listen to a lot of what he's got to say, but he's a good listener as well, and the really smart people in the world are good listeners. Now, last night on last call, Jeff Sonnefeld, a Yelp professor, said that you're finished, that that's it, Karen dispute, Jeff, or even a comment on it. I do not even know how to pronounce his name. Well, I think that's pretty definitive, frankly. Nelson, look, I'm thrilled you came on. I think that as a shareholder for my travel trust, I hope too, that things are that the corner has been turned, and I understand exactly how you feel in terms of trying to make changes at Disney. Thank you, Nelson Pels, for coming on Squall from the Street. Carl? Jim, thanks for having me. Absolutely. My pleasure. 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