Thursday, March 21, 2024


I have literally no idea if this is correct, I’m putting it forward as a set of facts that I think demonstrates the very complicated era we’re in from a corpgov perspective.

Ike Perlmutter was fired from Disney.  It’s very well known that he generally opposed attempts to diversify the MCU.

Nelson Peltz has teamed with Ike Perlmutter in his Disney proxy contest.  Nelson Peltz is a Trump supporter.  He’s also friends with Elon Musk, who has increasingly become a right wing culture warrior.

Disney has long been in the crosshairs of the right.  We all know about the fight with DeSantis and Don’t Say Gay; we also know that a Disney shareholder accused the company of abandoning shareholder value in order to promote a political agenda.

Elon Musk is furious about Disney pulling ads from ex-Twitter, and has openly criticized Disney’s diversity priorities.  He’s even bankrolling a suit by Gina Carano, alleging that Disney discriminated against her due to her conservative politics.

Bill Ackman has also criticized Disney for pulling ads from Twitter, specifically connecting that decision to the proxy fight with Peltz, and arguing that Peltz can right the ship.  

ISS is also a right wing target, on accusations that it recommends in favor of “woke” corporate governance instead of sticking to shareholder value.

ISS – I have to assume responding to this complaint – is creating a new “ESG skeptic” voting template, to go along with its other templates like Climate, Catholic, and SRI.

Glass Lewis recommended that shareholders vote for the Disney slate, against Nelson Peltz.  The Wall Street Journal recently published a fairly searing indictment of Peltz’s Trian fund.  And Jeffrey Sonnenfeld of the Yale School of Management, along with Steven Tian of the Yale Chief Executive Leadership Institute, argue that Trian has destroyed value at the companies where Peltz has won board seats.  

ISS just recommended in favor of Peltz in his bid for a Disney board seat.

I have no idea if ISS’s recommendation had anything to do with politics.  Certainly, it offered very plausible reasons for backing Trian, and the proxy fight itself does not involve (explicit) political accusations either way, notwithstanding Ackman’s hints.

But everything surrounding corpgov is so politicized these days that it’s impossible not to ask whether ISS thought that endorsing Peltz would help mitigate some of the right wing criticism.

I guess my point is, whether it’s a sign of the times or not, it is very hard to evaluate shareholder value in a manner that’s divorced from the political environment.  In the end, companies make money by appealing to popular tastes.  Politicians have every incentive to insist that their side is the “popular” one, and therefore that any appeals to other audiences must be unpopular, and therefore unprofitable.  Profitability is now a proxy for political popularity.  And when politicians threaten to legislate those preferences – functionally a legal dictate as to what is and is not profitable – we can’t tell if corporate actors are responding to the regulatory threats or their own independent judgment.

Edit 3/23: Remember how I said the fight does not involve (explicit) political accusations? Turns out, not so much: 'Why do I need an all-Black cast?' Disney criticizes Peltz remarks

Ann Lipton | Permalink


Seems bad!

Posted by: Nate | Mar 22, 2024 5:58:22 AM

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