Disney CEO Bob Iger said the company has asked its board to reinstate the dividend by the end of the calendar year. The payouts, beloved by investors, especially Disney’s legion of retail shareholders, were stopped abruptly during Covid to conserve cash.
Iger said the company’s planned cost cutting — of $5.5 billion — will make this possible. Initially, he said, the dividend will be “modest” but increase over time.
The news comes as the company is in the midst of a proxy battle with activist investor Nelson Peltz of Trian Group, who is asking shareholders to vote him onto the board of directors.
“When it comes to investing in growth and returning capital to shareholders, we will take a balanced and disciplined approach as we did throughout my previous tenure as CEO, when we invested in our core businesses and acquired new ones, bought back stock and paid a dividend to our shareholders. As a result of the impact of the Covid pandemic, we made the decision to suspend the dividend in the spring of 2020. Now that the pandemic impacts to our business are largely behind us. We intend to ask the Board to approve the reinstatement of a dividend by the end of the calendar year,” he said.
“Our cost cutting initiatives will make this possible, and while initially it will be a modest dividend. We hope to build upon it over time.”
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Disney said in May of 2020 that it would forgo payment of a semi-annual cash dividend for the first half of its fiscal 2020, “given the significant operational and financial disruption caused by Covid-19.”
It said the move would preserve about $1.6 billion in cash, based on the 88 cents a share previously paid to shareholders in January of 2020.
Iger also addressed succession planning. Activist Peltz has targeted Disney’s messiness in that regard, which resulted in the somewhat surprise appointment of Bob Chapek early in 2020, a renewal of his contract last summer and his abrupt departure in November.
“On the topic of succession,” Iger said, “the board recently established a dedicated succession planning committee headed by Mark Parker, who will become chairman of the Walt Disney company’s board following its annual meeting in early April.”
“I’m excited to work with him in his new capacity and I’m grateful to our outgoing Board Chairman Susan Arnold for 15 years of tremendous service,” he said.
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