https://www.nytimes.com/2024/03/16/business/media/peltz-disney-proxy.html
What Must Nelson Peltz Do to Get Some Respect?
The longtime corporate agitator feels misunderstood. Maybe his fight with Disney could change that.
Nelson Peltz, 81, has been battling the Walt Disney Company over its corporate strategy.
By
James B. Stewart and
Lauren Hirsch
March 16, 2024
At age 81, with over four decades of dealmaking and corporate cage-rattling under his belt, Nelson Peltz would seem to have pretty much everything.
He’s a billionaire. Until the hedge fund billionaire Ken Griffin came to Palm Beach, Fla., Mr. Peltz had the largest property tax bill in town, with an oceanfront estate estimated to be worth $334 million. His 130-acre property in Bedford, N.Y., known as High Winds, has its own helipad, indoor ice rink and waterfall. He has use of his company’s jet. (But so far, he owns no yacht — he rents one instead.)
He also has an undeniably full life apart from his business: He has two children from his first marriage. He also has eight children (including two sets of twins) with his wife since 1981, the former model Claudia Heffner. His eldest child from that marriage, Matt, is a partner and co-chief investment officer at Mr. Peltz’s Trian Partners.
His photogenic younger children have thrust him into the tabloids and onto the Hollywood red carpet. Nicola, an actress (“Bates Motel,” “Transformers: Age of Extinction,” “Welcome to Chippendales”), married Brooklyn Beckham, son of David and Victoria Beckham, in a splashy wedding at the Peltz Palm Beach estate in 2022. Will is also an actor (“Unfriended,” “Euphoria,” “Manifest”). Brad played hockey for Yale and was drafted by the Ottawa Senators.
And yet Mr. Peltz yearns for something that continues to elude him: the respect from the corporate elite, which he craves and feels he deserves. Could admittance to the inner sanctum of one of the best-known and most respected companies in the world — the Walt Disney Company — deliver that?
On and off for almost a year and a half, Trian Partners has waged an intense corporate fight by controlling a $3.5 billion stake in Disney and pushing for two board seats and influence over the company’s strategy. Mr. Peltz’s ammunition is a barrage of criticism of Disney’s management and board: The stock has plunged; costs have spiraled out of control; a string of big-budget film flops has raised questions about the company’s creative engine — problems that Mr. Peltz says he can reverse with his operational skills and strategic insight. While he concedes he has no experience in entertainment, his opinions, he says, are informed by his children and their high-powered friends, including Elon Musk, who has been critical of Disney.
The proxy battle has pitted him against Disney’s chief executive, Robert A. Iger, one of the media industry’s most powerful executives and someone Mr. Peltz once considered a good friend. Mr. Iger and Disney’s board have pushed back hard, even
enlisting the support of the Disney family, including Abigail Disney, who has long complained about Mr. Iger’s lofty compensation. The increasingly bitter contest is hurtling toward a climax on April 3, when Disney will hold its annual shareholder meeting and proxy votes will be counted.
That this fight is over far more than a couple of board seats, or even a multibillion-dollar stake in the company, was abundantly clear in a series of interviews with The New York Times at Trian’s offices on Park Avenue and in Palm Beach, and over the phone.
During the interviews, Mr. Peltz — who has had numerous similar run-ins with corporate giants such as Procter & Gamble, Heinz and Unilever — repeatedly lamented his reputation as a provocateur and “activist” investor, a thorn in the side of chief executives and their boards.
He hates being mentioned in the same company as a rogues’ gallery of activists, buyout operators and corporate raiders, as he often is. He thinks he should be compared to someone he admires and tries to emulate: Warren E. Buffett.
“Does Nelson feel misunderstood? He probably does,” said Arthur Winkleblack, who was chief financial officer at Heinz when Mr. Peltz waged a successful proxy contest there in 2006 and joined the board. “Not all activists are the same. There are activists who are not nice people. There are activists who are.”
Whatever label is attached to him, there’s little chance that Mr. Peltz will be embraced by the august members of the Business Roundtable, the Washington-based lobbying group of elite chief executives, given his long track record of public criticism of boards and chief executives, and his efforts, when rebuffed, to elbow his way into America’s boardrooms.
Jamie Dimon, the chief executive of JPMorgan Chase and a former chairman of the roundtable, recently came out against Mr. Peltz in the Disney proxy fight, citing the disruption that activist investors can bring to a board. JPMorgan is advising the company in its proxy defense. Disney has paid JPMorgan over $160 million in fees since 2014 as a client, according to LSEG, a financial data provider.
One measure of Mr. Peltz’s continuing notoriety is the reluctance of many people who have worked with him to speak on the record — even people he counts as friends and admirers, some of whom he recommended The Times interview for this article. That’s especially true in the midst of the Disney fight; several people said they didn’t want to be caught in the crossfire between Mr. Peltz and Mr. Iger, let alone Mr. Dimon. Both chief executives cast long shadows in the entertainment and business worlds.
“He’s like the uninvited guest who crashes a dinner party,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “No matter how charming, he’s not going to be welcome.”
Ski Bum Turned Billionaire
Mr. Peltz can be funny and self-deprecating: He recently told The Times that he was the only person he knew who had gained weight while taking Ozempic, which seems to be popular in his Palm Beach neighborhood (The tanned, fit-looking Mr. Peltz shows no obvious need to lose weight.)
Mr. Peltz, who was born and grew up in Brooklyn, traces his social skills to his student years at the Wharton School of the University of Pennsylvania, where he was president of his hard-partying Phi Gamma Delta fraternity. “Classes screwed up my day,” he said.
He left Wharton before graduating to pursue a passion for skiing, but en route to a job as an instructor at Oregon’s Mount Hood, he was pressed by his father into a two-week stint at the family’s small Bronx-based frozen food distribution company. He was soon brimming with ideas for building the business, investing in the stock market and staying. (He also shaved off his beard at his father’s request. He sports a neatly trimmed beard again today.)
In the decades that followed, Mr. Peltz’s career mirrored the history of modern dealmaking. His successful effort to buy out the notorious corporate raider Victor Posner from National Can in 1985 was the first all-junk-bond tender offer, using the low-rated, high-yielding bonds once shunned by conservative investors. It was also the start of Mr. Peltz’s relationship with the junk bond pioneer Michael Milken. (Mr. Peltz balked at Mr. Milken’s initial invitation, for a 5 a.m. meeting in Beverly Hills; Mr. Milken grudgingly moved the appointment to 6.)
Mr. Peltz forged a close friendship with another controversial raider, Saul Steinberg, who introduced him to Mr. Milken and whose own hostile run at Disney ended with a much-criticized greenmail payment in 1984. (Greenmail is a payment to a corporate raider in return for dropping a hostile takeover bid.)
After the National Can deal, Mr. Peltz’s Triangle Industries swallowed the rival American Can’s packaging division in 1986. He then sold Triangle to France’s Pechiney for $4.2 billion in 1988, including debt. The deal was widely acknowledged as one of the most successful leveraged buyouts, or deals largely funded by debt, and it established a model subsequently embraced by a generation of financiers.
Suddenly wealthy beyond his wildest dreams, and only 46, Mr. Peltz considered an early retirement. But he was quickly bored by golf. He went on to a series of other leveraged acquisitions, buying Snapple from Quaker for $300 million in 1997 and then selling it and some other brands three years later for $1.45 billion. (Mr. Peltz’s success at Snapple is the subject of
a Harvard Business School case study.)
“He would often suggest new flavors — and he would push us to come up with different forms and different bottles,” said Ken Gilbert, who was Snapple’s chief marketing officer at the time. “We were spinning out new products every month — it was crazy. And he loved it.”
Mr. Peltz helped found Trian in 2005 to pursue businesses that “weren’t well run but were too big for us to buy,” he said.
He and Peter May, his longtime partner, his friend and a former public accountant, courted outside investors and embraced a lucrative compensation model, taking both a management fee and a percentage of the fund’s gains, a model that soon swept the world of alternative investing and that has minted numerous billionaires.
A Builder, Not a Breaker?
For all Mr. Peltz’s business and financial success, not to mention longevity, his early associations with people like Mr. Posner (who pleaded no contest to tax evasion and fraud in 1988) and Mr. Milken (who pleaded guilty to multiple felonies in 1990 and was pardoned by President Donald J. Trump in 2020) no doubt tainted his reputation, fairly or not.
Even before then, he was turned down by the co-op board when he tried to buy an apartment at 740 Park Avenue in Manhattan, and not because he couldn’t pay in cash. The building, on the Upper East Side, is a residential haven for the corporate elite: His friend, Mr. Steinberg, lived there. And Blackstone’s Stephen A. Schwarzman subsequently bought Mr. Steinberg’s apartment, once home to John D. Rockefeller Jr. (The board later approved a purchase by Mr. May, Mr. Peltz’s partner and the president of the New York Philharmonic.)
On more than one occasion Mr. Peltz, who is Jewish, has encountered what he considered at least a whiff of antisemitism. He recalled that his arrival in London in the 1980s was greeted with a tabloid profile headlined “The Wild and Rocking World of Nelson Peltz.” The first sentence, he said, called him a “Jewish boy from Brooklyn,” and the British business establishment closed ranks against him.
Mr. Peltz, long a fierce critic of antisemitism, said he stepped down from his role as chairman of the Simon Wiesenthal Center in December because after 40 years in the position, it was time for a change. But
The Wall Street Journal reported that he left after the center called for a boycott of Ben & Jerry’s. The center had deemed posts by the company’s chairman to be pro-Palestinian after the Hamas attack on Israel. Mr. Peltz is a board member of Unilever, the owner of Ben & Jerry’s.
His fellow billionaire Henry Kravis, the buyout pioneer, is one of the few Jewish members of Palm Beach’s old-money Everglades Club, but not Mr. Peltz. Mr. Peltz said he had “refused to set foot” in the club until it had a Jewish member and, now that it does, has had lunch there several times. (Mr. Peltz belongs to the Palm Beach Country Club, which has long accommodated members excluded from more restrictive Palm Beach clubs.)
Mr. Peltz’s reputation as a corporate troublemaker also cost him his longtime relationship with his Manhattan law firm, Paul, Weiss, Rifkind, Wharton & Garrison. In 2019, the firm cut ties with him even though he had been one of its biggest clients for decades. Paul Weiss handled his estate planning and other matters; a Paul Weiss partner left the firm to become his general counsel. But after Paul Weiss expanded its elite corporate practice in recent years, the firm told him that it could no longer represent activist investors, including him.
Mr. Peltz countered that he wasn’t an activist, he was a “constructivist” — someone who worked with management, not against it. He had never mounted a hostile takeover, he said, or even fired a chief executive. Paul Weiss was unpersuaded. “They dropped me like that,” Mr. Peltz said. “I was probably their oldest living client.”
Vitriol for Disney
Mr. Peltz’s argument that he’s not an activist has also fallen on deaf ears at Disney.
Before the proxy fight, Mr. Peltz had breakfast with Mr. Iger at the Beverly Hills Hotel on occasion when Mr. Peltz was in Los Angeles, and Mr. Iger visited Mr. Peltz in New York. Disney’s pension fund also invested in Trian.
When Elliott Management, led by the activist investor Paul Singer, took a stake in AT&T in 2019 and agitated for change, Mr. Iger asked Mr. Peltz to address the Disney board. Topics on the agenda, according to records reviewed by The Times: “What made AT&T vulnerable?” and “Who will be the winners and losers” as big technology companies move into entertainment and media content production?
But early last year, after Mr. Peltz bought roughly $1 billion in Disney shares and threatened a proxy contest for a board seat if Disney rebuffed his proposals, Disney attacked Mr. Peltz, saying he did “not understand Disney’s businesses and lacks the skills and experience to assist the board in delivering shareholder value in a rapidly shifting media ecosystem.”
Even though Mr. Iger and the Disney board had seemed eager to tap Mr. Peltz’s expertise in 2019, Mr. Iger only grudgingly gave him 45 minutes on Jan. 10 last year to present his plans. Mr. Peltz’s reception was frosty — only Mr. Iger asked a perfunctory question.
Little more than a month after Mr. Peltz started his campaign, Disney pledged $5.5 billion in cost reductions (later raised to $7.5 billion) and said it would resume paying a dividend. Mr. Peltz said the changes aligned with Trian’s goals, and he backed off the proxy fight.
By December, he was back. Frustrated by the ensuing slide in Disney stock— from over $110 a share in February 2023 to below $80 in October— and what he deemed Disney’s failure to follow through with its pledges, Mr. Peltz and Trian renewed their campaign.
This time, Mr. Peltz increased the pressure by allying with two Disney veterans with intimate knowledge of the company: Ike Perlmutter and Jay Rasulo.
Mr. Rasulo, a former Disney chief financial officer and theme parks head, was considered a potential successor to Mr. Iger until he was passed over for the chief operating job in 2016. Mr. Rasulo and Mr. Peltz are Trian’s nominees for the Disney board.
Mr. Perlmutter is the sometimes irascible former chairman of Marvel Entertainment, which Disney bought in 2009 for $4 billion in cash and stock, making him one of Disney’s largest shareholders. He remained chairman of Marvel Entertainment after the deal, but Mr. Iger sidelined him in 2015 by revamping Disney management. Mr. Perlmutter was unceremoniously
laid off last year and has since been a vocal critic of Mr. Iger.
Mr. Trump introduced Mr. Peltz to Mr. Perlmutter in 2016 at Mar-a-Lago, where Mr. Perlmutter usually commands a prime dining room table next to Mr. Trump’s. Mr. Perlmutter has been a prominent financial backer of Mr. Trump’s presidential campaigns. Mr. Peltz, too, was a Trump supporter and
raised $10 million for him at his Palm Beach estate in February 2020. But the two stopped speaking after Mr. Peltz went on CNBC and denounced Mr. Trump’s efforts to overturn the 2020 presidential election and incite violence on Jan. 6, 2021, as a “disgrace.” His antipathy has only grown since, and Mr. Peltz said he would not raise more money for Mr. Trump.
Still, the falling-out hasn’t dented Mr. Peltz’s friendship with Mr. Perlmutter.
Mr. Perlmutter has entrusted Mr. Peltz to vote his Disney shares, inflaming tensions with the entertainment company. In its defense against the Trian campaign, Disney accused Mr. Perlmutter of bearing Mr. Iger “personal animosity” and blaming him for being fired.
Disney has also suggested that Mr. Peltz is motivated by a grudge against Mr. Iger, a claim that Mr. Peltz has vehemently denied. The company recently told investors that the men were never close friends, and that Disney ended its investment in Trian in 2021, angering Mr. Peltz, because the fund had underperformed the S&P 500 on an annualized basis over eight years. A spokesman for Mr. Peltz and Trian said they didn’t comment on client matters.
Lacking the information that he’d be privy to as a board member, Mr. Peltz doesn’t purport to have a novel solution to the streaming losses that have bedeviled Disney and other media companies trying to make the difficult transition to the direct-to-consumer digital era. He has been frank about his lack of direct experience in entertainment — something Disney has highlighted. But he said experience wasn’t everything. “They just put out five movies in a row that were big losers,” he said.
In Disney, he sees a company with great assets. But he also believes it’s a business crying out for greater operational accountability, more efficiency and better board governance. He considers Disney to be not that different from consumer-facing companies that he has helped turn around, like Heinz and Procter & Gamble.
Mr. Peltz also has better visibility into Disney’s operations than most of his past targets thanks to his alliance with Mr. Rasulo. Many were surprised that Mr. Rasulo would go up against Mr. Iger, his former mentor, in such public combat.
But Mr. Rasulo said in an interview that Mr. Iger’s abrupt departure in 2020 and the choice of the little-known Bob Chapek to replace him left him (and many others) mystified. So did Mr. Chapek’s sudden ouster and Mr. Iger’s return in 2022. Streaming losses soared, and Disney stock plunged.
“I was always a Disney guy,” said Mr. Rasulo, who spent three decades at the company, and the decline was painful to witness. “Something obviously went radically wrong.”
Mr. Rasulo didn’t know Mr. Peltz when they met for breakfast in Los Angeles a year and a half ago, but he said he had liked what he heard. He conducted his own interviews with people who had dealt with Mr. Peltz, and his research bore out what Mr. Peltz had emphasized — that he was a long-term investor looking to fix the company, not break it up.
Mr. Rasulo said he had no ambition to take Mr. Iger’s place as chief executive. He said he believed he could be an objective “voice of clarity” on the board as well as someone with intimate familiarity with the company’s operations and legacy. (Disney has countered that Mr. Rasulo left eight years ago and is out of touch with a radically changed media landscape.)
Mr. Peltz, too, said he looked forward to working closely with Mr. Iger if he gained a board seat. But that hasn’t stopped him from publicly criticizing Mr. Iger’s leadership. Waging his campaign on CNBC, in other media and in a recent whirlwind of visits to major shareholders, Mr. Peltz has argued that Disney grossly overpaid for 21st Century Fox assets in 2019, a $71 billion deal that saddled the company with enormous debt; that Mr. Iger and the board have repeatedly bungled succession planning; and that Mr. Iger has overseen an alarming decline in quality and financial results at the company’s core Disney animation, Pixar and Marvel entertainment units.
“The fact is, the emperor has no clothes,” Mr. Peltz said.
There have been no invitations from Disney to address the board this time.
In a statement for this article, a Disney spokesman said Mr. Peltz “has failed to demonstrate that he comprehends Disney’s strategic position in the modern media business, or to offer any compelling ideas, and we believe his presence in the boardroom would be disruptive and destructive.”
History as a Guide
A recurring issue in the Disney proxy fight will be Mr. Peltz’s investment record, which remains a closely guarded secret. Various academic studies have found that activist investors, on average, don’t generate superior returns over time.
Trian maintains that federal rules prohibit it from publicizing its results. But the firm said that from the time Mr. Peltz joined a company’s board — 11 in all — through the end of 2023, Trian’s investments in those 11 companies generated a 17 percent annualized rate of return. The S&P 500 has returned an annualized 9.5 percent since 2005, when Trian was founded.
Trian said it used that measure — from the date Mr. Peltz joined a board to the present — because the fund took a long-term approach and often continued to own shares after Mr. Peltz or one of his Trian partners left a board. If returns were measured until the date they stepped down, the returns would be slightly higher, it said.
Annualized returns in those companies range from 47 percent (Legg Mason, acquired by Franklin Templeton in 2020, a year after Mr. Peltz joined the board) to 3 percent (Unilever, which was Trian’s most recent investment before Disney and whose board Mr. Peltz joined in 2022).
Trian argues that these returns are what’s relevant to shareholders of the target companies, including Disney. Trian’s own investors haven’t reaped annualized gains that large, in part because the fund isn’t always fully invested and holds cash and shares in other companies.
One investor said Trian gained 12 percent in 2023 (well below the S&P 500’s 24 percent rise) and lost 10.6 percent in 2022 (when the S&P dropped over 18 percent). Disney said Trian’s annualized returns for its pension fund trailed the S&P 500 by 500 basis points, or 5 percent, over eight years. (Trian said that it offered multiple investment and fee options, and that individual investor results therefore varied.)
Still, many investors have been satisfied: Trian’s assets have gone from less than $1 billion when it was founded in 2005 to over $10 billion. Mr. Peltz attributes his investment success to his operational skills and long-term perspective.
“We’re not activists,” he insisted. “We’re not private equity. We’re not looking to just leverage up a business and sell. We’re looking to build a business over the long term. That’s what’s fun.”
Mr. Peltz noted that the average holding period for a Trian position was six years— long by activist standards, though about the same as private equity funds. Some holdings, like Wendy’s, have been much longer.
The Times interviewed a dozen former executives at companies targeted by Mr. Peltz, and all said he had bolstered results, even those who said they had no particular fondness for him and declined to be quoted.
Mr. Winkleblack, who orchestrated Heinz’s defense in the proxy contest, thought it possible, even likely, that he’d be fired once Mr. Peltz gained a board seat. On the contrary, he stayed in his role after he met Mr. Peltz one on one.
“We fought a good fight,” Mr. Peltz told him. “Now let’s go make money for shareholders.” That, in essence, is Mr. Peltz’s philosophy, Mr. Winkleblack said.
After an extensive listening tour, Mr. Peltz backed Heinz’s chief executive, William Johnson, and his turnaround plan. Mr. Peltz subsequently proposed Mr. Johnson, whom he now calls a “great friend,” for the PepsiCo board, and Mr. Winkleblack now serves as a Trian representative on Wendy’s board.
Mr. Peltz’s battle against DuPont was in some ways the beginning of modern-day activism: evolving into a full-blown fight in which an influential proxy firm, ISS, sided with Mr. Peltz while index funds, decisively, sided with the company’s management.
Though Mr. Peltz lost the proxy fight in 2015, DuPont’s chief executive, Ellen Kullman, stepped down not long after. Her successor, Edward D. Breen, developed a warm relationship with Mr. Peltz and embraced much of his strategy.
Mr. Peltz said Trian intended to remain a major Disney shareholder and keep up the pressure even if it lost the proxy battle, and pointed to DuPont as a precedent.
Procter & Gamble put up a spirited defense to Mr. Peltz’s proxy campaign but, after a narrow loss, reluctantly welcomed Mr. Peltz into the boardroom in 2017. Two years later, Mr. Peltz and the company’s chief executive, David Taylor, were heaping praise on each other.
“We’d rather be rich than right, and David has that same attitude,” Mr. Peltz said at a conference sponsored by CNBC and Institutional Investor. “That’s why we’re getting along so well.”
Several executives who have faced Mr. Peltz’s attention said they saw a common theme: He accelerated existing recovery plans, and then reaped credit for the success. Chief executives who get along with him have to swallow their egos — something that might prove difficult for someone as prominent as Mr. Iger, especially given all the recent vitriol.
Many also said that the care and feeding of Mr. Peltz was time-consuming. After Mr. Peltz joined the board of the snack food maker Mondelez International, then-chief executive Irene Rosenfeld created a new executive position to handle some administrative duties while she dealt with Mr. Peltz and other activist shareholders. Still, Mondelez shares rose an annualized 11 percent while Mr. Peltz was on the board, Trian said.
No one The Times interviewed could recall Mr. Peltz’s arriving on a board with bold ideas that no one else at the company had ever thought of.
“He’ll offer thoughts. He’ll have a thesis,” as one former chief executive said. “But the reality is no one can come from the outside and really know a well-managed company. They’re not going to walk in and tell them something they’ve never thought of.”
Still Rocking the Boat
Which is why, when all is said and done, Mr. Peltz may never escape the unsavory reputation that still dogs him, at least in some quarters, and why it’s unlikely he’ll ever be mentioned in the same breath as Mr. Buffett, whose Berkshire Hathaway acquires companies only in friendly deals.
Mr. Peltz seems oblivious that even when he is invited onto a board, it’s often under duress: better to have him on the inside, with a director’s duty to shareholders, than on the outside waging a proxy war.
Mr. Peltz “may be a very smart investor and a very savvy operator, but he rocks the boat,” Mr. Elson of the University of Delaware said. “People who rock the boat are naturally going to cross swords with the establishment.” (Mr. Elson’s family is also a pillar of Palm Beach high society; his father, Edward, was U.S. ambassador to Denmark in the 1990s, and his mother, Susie, was chair of Palm Beach’s Society of the Four Arts.)
“No one likes to be told you’re doing something wrong. That’s just human nature,” Mr. Elson continued. “When that happens, you’re viewed as a dissident, an irritant. Irritants aren’t loved.”
Loved or not, Mr. Peltz has Mr. Elson’s admiration, he said, even if he doesn’t always agree with Mr. Peltz’s approach. “Irritants,” he said, “are important to the proper functioning of a capitalist society.”
