Shareholders Getting Fed Up With Underperformance by Woke CEOs

The Walt Disney Company This could be a warning sign for CEOs who have pledged allegiance the environment, governance, and social.ESG) movement.

It is becoming more common for activist asset managers and global clubs such as the World Economic Forum to press corporations into following the ESG agenda. But Disney is feeling the heat from shareholders who want it to be focused on its declining share price and sales.

Vivek Ramaswamy is the founder and chairman at Strive Asset Management. He told The Epoch Times “Disney unnecessarily waded into a fraught political debate and hurt its business interests as a result.”

“It’s no surprise that shareholders are frustrated and now speaking up,” He said. “Other CEOs should learn their lesson: focus on excellence over politics.”

Ramaswamy, a shareholder, informed Disney in September 2022 “over the last year, the Walt Disney Company’s public approval rating plummeted from 77 percent to 33 percent—an unprecedented collapse following Disney’s public embrace of controversial political positions in deference to social activists.”

Disney started a political battle with the state This is Florida last spring in which Disney vowed to fight to overturn a parents’ rights law that banned the teaching of sexual content in kindergarten through third grade, while also proclaiming its “not-at-all-secret gay agenda” of “adding queerness” into children’s shows. Disney was also present in March 2022. vowed to fight Texas is investigating transgender operations on minors in order to find out if they are child abuse violators.

Disney’s political campaign quickly heated up, with Florida Gov. Ron DeSantis reacted in public statements to Disney’s claims and finally ended the self-governing status at the large Disney World park. There were protests by both Disney CEO Bob Chapek’s supporters and opponents, with some families banning Disney products. Published an article by religious and conservative employees anonymous letterYou claim that “the Walt Disney Company has come to be an increasingly uncomfortable place to work for those of us whose political and religious views are not explicitly progressive.”

Disney stock remains under pressure despite Chapek being fired. It has fallen more than 21 per cent over the past 12 months, compared with an approximate 8 per cent decline in S&P 500 Index Index over the same time period. Some shareholders appear to be fed up.

Disney: Legal and Investor Headaches

Recently, one large shareholder was recognized brought a lawsuit against Disney’s management, stating that their political agenda has created “far-reaching” Financial risks for the company. Investor Kenneth Simeone filed 22 pages last month claiming that “the financial repercussions from Disney’s actions, and resulting harm to the company and its stockholders, have been swift and severe.” Simeone demanded that management hand over records regarding its decision to fight Florida’s parents’ rights law as a possible precursor to further legal action against Disney executives.

Nelson Peltz, a large shareholder dissatisfaction, and Dan Loeb are two other prominent stockholders. putting heat Disney. Peltz demanded a seat on the board to aid the company’s recovery, which was refused by current management. Peltz is known for his role in forcing GE’s management to break up what had been the world’s largest conglomerate into three component parts 2021, in order to boost the sagging stock price.

In April, Reed Rubinstein, a former U.S. deputy associate attorney general and current senior counselor for America First Legal, penned a letter to Disney’s board on behalf of shareholders that demanded an investigation into the “wasting of corporate assets,” including the tarnishing of Disney’s trusted reputation for creating G-rated children’s entertainment, as well as potential violations of employees’ civil rights.

Rubinstein demanded that Disney’s board explain to shareholders its rationale for policies, including “why the company supports lessons on sexual orientation for five-year-old children, while simultaneously opposing parental notification,” What and how? “adding queerness to children’s programming will enhance the company’s reputation.”

CEOs, who once enthusiastically supported ESG, are starting to reconsider their support. According to a survey of CEOs KPMG Management Consulting found that half of all corporate leaders believe they are now considering rethinking, or even stopping their ESG initiatives when economic conditions get more challenging.

Poll: Americans Don’t Much Think Much of the ESG Agenda

Further, the more people are made aware of ESG policies’ goals and effects, the less they like them. A recent poll Elon Musk, the new owner of Twitter, asked whether the World Economic Forum (one of the most vocal advocates for the ESG movement) should have control over the world. Out of the 2.5 million respondents, 86 percent answered “no”. According to a poll taken in April 2022, only 27 percent supported Disney’s position that discussions of sexual topics are appropriate in elementary schools.

ESG is presented as a risk-management tool and not as a political ideology. But, one risk it doesn’t mention is legal risk. Apart from customers and shareholders, there is also pushback. “woke” Vice-presidents of CEOs can also face trouble for violating U.S. Antitrust and Civil Rights laws.

Recently, House Republicans issued letters ESG corporate clubs Climate Action 100+, Ceres were notified to keep their records in case of an antitrust investigation. Numerous U.S. senators sent a similar letter to prominent law companies that have ESG corporate advisory practices.

Further, the racial or gender quotas included in the ESG social and governance component likely violate the Civil Rights Act of 64, which prohibits discrimination on grounds of race, color religion, gender and national origin. Many states also have similar civil rights laws, and in December California’s Court of Appeals ruled A decree establishing gender quotas for corporate boards was in violation of state law.

In November 2022 Disney fired Chapek. They brought back Bob Iger, the former CEO. Iger had a track record in progressive activism but seemed to be signaling a shift of direction.

“I was sorry to see us dragged into that battle, and I have no idea exactly what its ramifications are,” Iger told employees When you take the helm.

Governor DeSantis responded to Tucker Carlson, Fox News host: “We didn’t drag them in, Tucker. They went in on their own, and not only opposed the bill, they threatened to get it repealed.”

Disney didn’t respond to our request for comment on this article.