Nelson Peltz is the Billionaire Beckham-in-Law Vying to Crash Disney’s Board
When octogenarian billionaire Nelson Peltz calls, perhaps from his New York office — or, if he craves the sun, his 44,000-square-foot mansion on Palm Beach Island — the world’s most powerful CEOs have reason to worry.
Peltz’s firm, Trian Fund Management, specializes in activist campaigns against companies it believes are underperforming. Industry giants like DuPont, Procter & Gamble and PepsiCo have all felt the heat.
Peltz described his philosophy simply in 2016: “We’re trying to figure out how we can grow sales and cover expenses.” Sometimes, that means helping show executives the door.
Trian’s latest target: Disney, where Bob Iger returned as CEO in November, less than three years after passing the torch to Bob Chapek. Since last summer, Peltz has been asking for a seat on the board, but Disney has not agreed. As a result, Trian has stepped up the pressure, launching a website called “Restore the Magic” and vowing to take the fight directly to other shareholders.
Peltz is looking for a clear succession plan for Iger and is pushing to cut costs. And he’s apparently willing to embarrass Iger to gain leverage. In a recent public appearance, Trian pointedly pointed out that Iger wanted to schedule a board meeting on a date that would leave him plenty of time “to sail his yacht off the coast of New Zealand.” .
Trian declined to comment. Disney did not respond to an email from The Daily Beast.
Trian, which Peltz founded in 2005, oversees approximately $8 billion in assets under management. “It’s enabled them to get a big game,” said Stephen Bainbridge, a professor at the UCLA School of Law who has extensively researched corporate governance.
“I would say that on the spectrum of hedge fund activists, Peltz is definitely on the aggressive end,” Bainbridge continued, though he noted that in many cases, Trian has made “changes that were seen as beneficial.”
The problem is getting executives to listen without a protracted battle, he said, since CEOs are known for having “big egos” and “nobody wants what they would consider to be some kind of professional embarrassment coming in and telling them to change their plans.”
Edward Rock, co-director of NYU Law’s Institute for Corporate Governance and Finance, told the Daily Beast that Trian engages “with companies because they think they can really make them better.” Aggressive tactics come next.
In 2017, for example, Peltz launched a protracted proxy fight against Procter & Gamble for a board seat.
During that clash, “Trian used the media and issued detailed white papers to criticize the performance of the P&G CEO,” said Szu-yin “Jennifer” Wu, who teaches corporate finance at the University at Buffalo. According to media reports, the proxy battle cost over $100 million, one of the “most expensive in corporate American history.” (Peltz lost the final vote by a narrow margin, Procter and Gamble said at the time, but he still got a seat on the board.)
In another case, Peltz reportedly warned Unilever chief Alan Jope not to allow brands to take political positions after its subsidiary Ben & Jerry’s announced that its ice cream would not be sold in Israeli settlements in the Palestinian territories. (Unilever later moved to prevent the ban from taking effect.)
“I would say that on the spectrum of hedge fund activists, Peltz is definitely on the aggressive end.”
Trian has similarly sought influence at Wendy’s, which it invested in in 2005, arguing that the restaurant chain had “lost its way following the death of its founder Dave Thomas.” Meanwhile, at DuPont, Trian lobbied in 2014 to split the business into different segments, a proposal that ultimately failed.
“Peltz has a pirate charm and a velvet handle. But don’t mistake the iron fist. He is relentless in his pursuit of his objective, which is to create value,” the former chairman of Cadbury, who once experienced a Trian pressure campaign, told the Financial Times.
To his critics, Peltz’s tactics prioritize short-term returns over long-term financial health. “They’re in it and then out,” Bainbridge said, summarizing the argument against many hedge fund investors. (Trian has said the firm invests in companies for an average length of six years when it takes a board seat, longer than some competitors.)
Rabbi Marvin Hier, Nelson Peltz and Rupert Murdoch attend the 2006 Simon Wiesenthal Center Annual Honors Dinner in New York City.
Jimi Celeste/Patrick McMullan via Getty Images
Nadya Malenko, an associate professor at the University of Michigan who sees Trian as potentially “less hostile” than some rivals, defended the activist industry. “They are adept at streamlining the company and selling assets that the company doesn’t have a good ability to operate efficiently,” she said.
At Disney, Trian insists he doesn’t want to fire Iger, nor does he intend to destroy his assets. Instead, Peltz’s team argues, Disney should reduce its “non-core” expenses, tie executive compensation to targeted business objectives and improve its approach to acquisitions.
In a letter to Disney’s board on Jan. 8, the firm argued that “Trian investments where Nelson has served on the board have outperformed the S&P 500 by approx. [9 percent] every year during the period of his involvement on the board.”
Despite his triumphs, in recent years Peltz’s name has been more often associated with his daughter, Nicola, who last spring married the son of soccer legend David Beckham and fashion designer Victoria Beckham. The incident occurred at Peltz’s Palm Beach property.
“There’s some irony here that a guy who’s a multi-billionaire, and in the corporate world is known and feared … he’s kind of in the back of a picture with a bunch of Beckhams in it,” Bainbridge said. “It’s kind of funny that way.”