We’re at Walt Disney World’s EPCOT Center this morning, enjoying the Spring Flower & Garden Festival. They do a great job colorfully bedazzling the parks this time of year.
The beauty in the parks is belied by the nastiness of a proxy fight behind the financial scenes at the Walt Disney Company. An activist investor, Nelson Peltz, is trying for the 24th time to gain control of the company and make changes to turn around their admittedly poor performance.
I’m not going to get into the pro’s and con’s of the company’s recent strategies or Peltz’s proposals, but I’m surprised to see both sides advertising to individual investors to “vote their slate” for prospective board members on one side or the other.
I honestly have never voted in any shareholder meetings I’ve ever been eligible to – including the MegaCorps I used to be employed by. I always felt that the big pensions and institutional investors that own the lion’s share of stock would easily drown out my tiny voice. Why waste my time? (For the record, I do NOT hold stock in Disney and never have).
That makes the public nature of this Disney vote interesting. All sides (management, Peltz, and a third party) have a slate of candidates that they are appealing to individual investors to vote for. Disney made a cartoon using Scrooge McDuck to argue for their management. Peltz has a website called ‘Restore The Magic’ to make his case. I regularly see ads for both pop up on Facebook or on other websites I visit.
I guess Disney has more individual investors than the average company, since it is such a well-known brand. It looks like about 35% of the stock is owned by ‘retail investors’. Maybe with a couple big institutions, that’s enough to swing the vote. It will be interesting to see what happens at their shareholder’s meeting on April 4th this year.
Do you regularly vote your shares in large companies you are invested in?
Image: (c) MrFireStation
MrFireStation 
I was a long term Disney shareholder from 2004 to 2020. Roy Disney, one of Walt’s nephews was the dissident shareholder soliciting an alternate proxy “to fire Eisner before he had a chance to pay himself again.” Disney worked out fairly well up until 2020. My compound rate or return was 13.6% and my yield of cost was 8.8%.
I dumped my shares after they dumped their dividend in 2020. This appears to have been a correct decision, because Disney only would have returned 2% annualized over the past four years, and just reinstated its dividend at about a third of what it was.
I continue monitoring them expecting an alternate proxy to right the ship. The issue you have that is different than 2004, is that Blackrock, Vanguard, and Fidelity will likely vote for the woke agenda that Disney Management is following.
The big question is, are there enough individual investors and institutional holders who are not woke and are willing to vote for a financial improvement and return to traditional values proxy?
LikeLiked by 1 person
Hmm … as you know, I don’t put a ton of stock in the ‘woke’ argument. It looks like Disney suspended their dividend in May 2020 when they were trading about $100-115/share. Most of 2021, they were up +50% to $170-180, so you might have gotten out too soon. They fell hard in November 2021 when the bloom was off the rose of Disney+ (expensive content & stopped reaching their subscriber goals). Disney+ … I think that’s been the biggest trouble for them.
LikeLiked by 1 person
Disney announced the dividend suspension some time during the spring. You see it show up as hitting during the summer, because they only paid their dividend twice per year.
I am happy with my decision. I was able to redeploy my cash into dividend paying stocks at a bargain price that also rebounded nicely and ended 2020 with a much higher annual dividend income. The promises of fantastic streaming income never materialized and it caught up with them. Most investors buy when the stock was at new high, using the new high as validation that the strategy was working out. Eventually the business performance caught up with it.
Dumping when they cut their dividend got me out before I could catch the hype tsunami. It also got me out before reality sunk in.
Here are some numbers from Ned Davis Research that benchmark the returns of stocks categorized by their dividend policies between 1973 and 2020.
Growing Dividends 10.1%
Steady Dividends 7.7%
No Dividend 2.6%
Dividend Cutters and Eliminators -0.6%
My approach does not catch the select few stocks that grow to the moon without paying dividends such as Tesla, because I am playing the odds. I can live on making around a 10% return. When the market price of stocks goes down, I still get my dividends. If I am reinvesting some of the dividends, I end up buying more dividend paying stocks at a bargain price. And, I get a nice raise every year when the dividend growers I hold increase their dividend. Much better than more predictable than my salary from working in corporate America.
LikeLiked by 1 person
Here is an article from one of my favorite columnists who writes about woke policies of companies catching up with them. He is our type of guy. He grew up in Wisconsin on a dairy farm. I think he should call his column The Daily Schadenfreude, because it documents that ways that woke corporations (especially entertainment) are waking up in their own vomit.
One of his articles was that you need to dump your cable or satellite package because the carriage fees are offering life support to the enemy including CNN and MSNBC and you will save a bunch of money was a personal wake up call. My wife and I dumped our package to go streaming and off-air. We couldn’t be happier with the content and it is nice putting another $100+ per month in our pocket.
You also need to consider that woke Blue States are losing productive tax paying citizens to Red States.
https://www.breitbart.com/entertainment/2024/03/04/nolte-audience-rejection-woke-hollywood-drops-amc-theater-stock-8/
LikeLiked by 1 person
Well, I dumped cable myself last year and I am down to a few streaming services.
The biggest ‘woke’ concerned that I have seen over the last couple weeks is the Google Gemini AI project. The degree of biases built into the model was insane. Of course, they were all caught quickly by the public. We don’t need government regulating these technologies when they are so easily exposed.
LikeLiked by 1 person
Last summer we dropped our cable, so I guess I am helping the conservative cause in that sense. It’s hard to keep up with all of the companies that we are supposed to boycott, although I think the media is an especially important industry.
The work initiative that I am most concerned about recently is the Google Gemini, AI service. The level of bias that has been demonstrated in its “thinking” is astounding. Of course users quickly discovered the concerns and brought them to the worlds attention. I’m certainly hopeful. It doesn’t lead the GOP to say we need to regulate something that is so easily found out.
LikeLiked by 1 person
Chief, we live in a truly unique time when the traditional MSM and new media outlets have been exposed for inserting their political biases. However, we are also living in a time where you often have access to unfiltered raw video that allows one to watch the entire chain of events and decide for yourself what happened, at least if you still trust your eyes and can make decisions for yourself.
I sent my late Father two links for videos about Nicholas Sandman. He was a on a high school class trip to Washington, D.C. and had just finished participating in the “Walk for Life”. There was the infamous short video clip that CNN aired that showed Mr. Sandman looking like an aggressor who was getting in the face of a Native American and smirking at him.
However, a link to the video to the entire chain of events showed that the Native American was actually the aggressor and following Mr. Sandman around and beating a drum in his face. The difference between these two videos cost CNN $160 Million as settlement for a defamation lawsuit.
LikeLiked by 1 person
People can certainly spot a fake. I could tell right away that something was off in that Sandman video from CNN. Same think for Jessie Smollett and a dozen other fakes.
LikeLiked by 1 person
Here is a link to Nelson Peltz’s Trian Management Proposal to join Disney’s Board. It is a very interesting read and tells the tale.
Click to access Disney-Trian-White-Paper-2024.pdf
Several takeaways that I got from a quick read. The CEO and Board have been paying themselves nicely despite the shareholders losing money over the past 10 years, based upon acquisitions that are increasing revenue while not increasing profits, FCF and most important to me, dividends.
Disney seems to have lost the ability to do cost accounting. How to get a product to market where you can earn a nice profit. Their streaming revenue slightly exceeds Netflix’s, but Netflix makes profit and DIS doesn’t!
Disney has failed a succession planning and has a culture that avoids a diversity of opinions. Not exactly an incubator for creative thinking. This shows in the box office as the majority of the films are prequels and sequels versus new stories.
The White Paper also talks about the park experience being degraded through outages and long line wait times.
LikeLiked by 1 person
It’s an interesting critique to read through. I read it a couple weeks ago. I think they fairly point out the issues with the company.
It’s been a disaster for the last 4 years and Iger is to blame. The issues started before Chapek took over and haven’t improved since Iger returned.
Still, I’m not sure how it would work with having Peltz in the boardroom. I guess he’s the 2nd biggest shareholder behind George Lucas, so that gives him some weight, but Lucas backs Iger. If I had to vote, I’d want to understand the Disney board bylaws. How troublesome would it be to have two ‘opposition’ directors? What might they be able to force on the rest of the board?
If it’s just 2 votes that can only hope to influence a majority of the board to consider different actions, that’s good. I’d vote for that.
LikeLiked by 1 person
Everything Peltz is suggesting looked reasonable to me. The board seems to have forgotten that public companies are supposed to make money for their investors. Not my cup of tea any longer thou.
LikeLiked by 1 person
I had a stack of emailed proxies to vote on this morning and there was some very interesting shareholder proposals presented. Verizon, which has a large web presence, had a shareholder who proposed that Verizon should avoid risk by protecting its customers’ 1st Amendment Rights. There were also shareholder proposals to assure that political contributions were aligned with shareholder and not management’s values.
American Express also had a shareholder proposal that would bar Amex from coding gun and ammunition purchases to protect customer’s 2nd Amendment rights. There was another shareholder proposal that buys into the greenhouse scam and attempts to have the company report on its risk exposure caused by investing in greenhouse gas producers.
I also glance at resumes to see if someone is on the board where their only reason for being there is to tick boxes. Shareholder proxies are a chance to see if the emperor is wearing no clothes.
LikeLiked by 1 person
Those are pretty thoughtful proposals. I’m guessing the companies either didn’t comment on them or didn’t support them. Too bad, because getting drawn into politics IS a significant brand risk to brand value.
LikeLiked by 1 person
You guessed right. Of course management didn’t recommend voting for proposals that guarantee following Constitutional rights. Crazy that this is even an issue and that management thinks the US Constitution is a list of suggestions. Dissident shareholders shining a light on this is hopefully part of the cure.
LikeLike