Disney Gets Strong Endorsement From Proxy Advisor

Walt Disney on Monday received a critical endorsement from a proxy advisory firm when Glass Lewis urged shareholders to re-elect all of the company's directors in one of the season's most hotly contested boardroom battles.

Reuters reports the recommendation, which can sway how investors vote in critical elections, dealt a blow to Trian Fund Management and Blackwells Capital as the two hedge funds argue Disney needs new blood in the boardroom to reinvigorate the entertainment giant.

Glass Lewis said the company's most recent financial quarter serves as a "promising indication of Disney's strengthening prospects" under CEO Bob Iger. The company is making strides to turn its streaming business profitable and making changes at the film studio -- including parting ways with the president of the motion picture studio -- as well as plans for a $60 billion investment in parks over the next decade, the report said.

Disney's Bob Iger

Even last year when Disney's stock price dropped, Glass Lewis said the company did not sit "idle." It hired a new chief financial officer, rationalized portions of its portfolio, refreshed portions of its creative staff and appointed new board members.

"We believe investors would be best served endorsing the incumbent directors at this time," the Glass Lewis report, seen by Reuters, said.

Trian has argued that Disney was slow to adapt to changes in streaming and bungled succession planning, creating a "leadership void" and has lost its creative spark. The mistakes have caused Disney's stock to underperform the S&P 500. Blackwells Capital, which has been more supportive of Iger's strategy, is calling for the company to spin off its parks and hotel assets and harness technology better.

Disney "pulls no punches" as it makes the case for its turnaround, including rejecting the candidates nominated by Trian and Blackwells, Glass Lewis wrote.

The advisory firm said recent gains at Disney "do not entirely paper over the less favorable aspects of Disney's, and Iger's, legacy performance", and added "we do recognize there exists a notional thesis for shareholder intervention."

But it appears Disney's initiatives are gaining traction, Glass Lewis wrote.