Disney versus Nelson Peltz vote hinges on Vanguard, State Street, institutional investors

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In 2015, Nelson Peltz's Trian Partners was defeated in an activist campaign against chemical firm DuPont , largely because the top three institutional shareholders voted against his slate. Nearly a decade later, those same institutional investors — Vanguard, State Street and BlackRock — are the three largest shareholders in Disney . And they could make or break Peltz's campaign against the board that's backing Disney CEO Bob Iger. BlackRock, a 4.2% Disney shareholder, is backing management, The Wall Street Journal reported Monday. T. Rowe Price and Norway's sovereign wealth fund, both smaller shareholders but well-known names, have confirmed to CNBC they're also backing the current management. Vanguard, with an 8.4% stake, has also chosen to back management over Peltz, Bloomberg News reported Tuesday. Of the three top shareholders, only State Street's position is unclear. All institutional shareholders can change their vote through Wednesday. Trian already has fighters in its corner. Former Marvel chairman Ike Perlmutter has entrusted Peltz with his 33 million Disney shares, the bulk of the activist's 1.8% stake. New York City's retirement fund, Neuberger Berman, and the California pension plan CalPERS, said they support the activist. Peltz also won the backing of proxy advisory firms ISS and Egan-Jones. The showdown between Trian Partners and Disney touches on some of the most complex issues confronting executives today, whether it is CEO succession or the role of corporations in confronting so-called "woke" social issues. Iger left the CEO post in 2020. His successor, Bob Chapek, was ousted in 2022, with Disney's board inviting Iger to take the top post once again. The succession failure has been highlighted by proxy advisory firms and Trian itself. Disney says Peltz's efforts distract from Iger's efforts to turn the company around. Trian argues that Peltz's expertise would help the company find a second successor to Iger and fix its underperforming stock. Both sides have made their case to investors for months in media appearances, conferences, one-on-one dinners, and meetings with top investors. But the institutional vote will be key at Disney. Just 33% of shareholders are considered retail, a significant amount, but they're less likely to vote than their institutional peers. Vanguard is the largest holder with 8% of outstanding Disney shares. It can punch above its weight in deciding whether to elect the dissidents to Disney's board. That's because, like in a political election, not every eligible voter will vote during Disney's shareholder meeting. In 2021, for example, 63% of Disney shareholders voted their shares, according to data analyzed by 13D Monitor. In a contested election, that number is likely to go much higher as proxy solicitors on both sides canvass shareholders, 13D Monitor's Ken Squire said. "With the introduction of the universal proxy card, you should get better turnout as well," Squire told CNBC. Disney has hired Innisfree M&A for their solicitation. Trian is splitting the load between Okapi Partners and D.F. King.