Companies' annual shareholder meetings aren't usually the kind of events that financial journalists circle on their calendars, but Wednesday's virtual gathering of Walt Disney (DIS -0.04%) investors bears watching. All 11 of the media giant's board members are up for renewal, and there are grassroots efforts building to press shareholders to vote against CEO Bob Chapek keeping his seat as a director.
Late last year, the groundswell of negativity stemmed largely from Disney theme park annual pass holders who were upset by recent changes at the gated attractions. Now, however, Chapek is in the crosshairs of activists who are upset that he has not taken a stance against the new Florida Parental Rights in Education bill. The legislation -- known more commonly by critics as the "Don't Say Gay" bill -- largely bans classroom instruction that touches on topics of sexual orientation and gender identity.
Chapek put out a statement on Tuesday expressing support for the LGBTQ+ community, but also explaining why Disney leadership has not taken a public stand against the legislation. That only added to the tensions between Disney's CEO and activists who feel he's not doing enough. Suddenly, Wednesday's shareholder vote is looking a lot more interesting.
Image source: Getty Images.
A whole new world
The theme park regulars who launched Change.org petitions last year to have Chapek removed as CEO were never going to get very far with their efforts. Disney isn't the only park operator raising prices. Offering premium-priced access to expedited queues is something that its biggest rivals have been doing for years. More importantly, we're talking about institutional investors voting large blocks of shares at these meetings.
Disney's domestic theme parks posted record revenue and operating profits in its latest quarter, and the crowds are still so large that it has had to turn potential guests away and suspend most new annual pass sales. These aren't the kind of results that investors will vote against unless they're doing so from an emotional perspective that values nostalgia over financial prosperity.
Chapek's decision to stay out of the Florida debate is a bit more nuanced, but far more problematic. His response on Tuesday boiled down to actions mattering more than words. He argues that a corporate statement condemning the Florida bill -- or similar ones in the works across other states -- could be "weaponized" by one side of the political spectrum to divide and inflame. He preferred to list recent Disney films and TV shows that have emphasized inclusion and equality -- the company, he asserts, is leading by example when it comes to acceptance. There's a kernel of truth in that, but that may not be enough.
In the lyrical poetry of Rush: "If you choose not to decide, you still have made a choice."
Fire up your social media feeds, and you'll rapidly be presented with the names of the Western companies that are still doing business in Russia since its invasion of Ukraine. Those companies may not have actively made new choices about their relationships with Russia in light of its aggression, but in passively sticking with the status quo, they did make choices.
This doesn't mean that Chapek will lose his board seat in Wednesday's vote. Numerous Disney shareholders voted long before Tuesday's poorly received statement, including the institutional stakeholders with the largest positions in the company. However, you can be sure that folks will be watching how many fewer votes Chapek receives than the other 10 directors on the ballot.
Taking a stand can be alienating, and when you're a bellwether among entertainment companies, it's understandable that you wouldn't want to alienate any segment of your fan base. Unfortunately for Chapek, this isn't the kind of pulse check that you can sit out. It's not just penny-pinching theme park visitors whom he needs to win back now. He'll easily win Wednesday's shareholder vote to stay on the board, but he's going to have to try harder if he wants to stay at the helm as long as his predecessor Bob Iger -- who had no problem publicly condemning the "Don't Say Gay" bill.
