Retail investors, who made up nearly 40% of Disney’s shareholding brought some magic of their own to the Disney proxy contest. Both parties – Bob Iger as current CEO and Nelson Pelts as the activist mounting the proxy context for seats on the board – made sure to have some special messaging to woo retail investors. This is different from what we see in the case of ‘meme stocks’ like Gamestop during the pandemic where fans of Gamestop caused the stock price to go up well beyond the company’s fundamentals, and currently of Trump’s Truth Social where Trump fans are driving up the stock price. Rather, the Disney case represents an example of retail investor actively participating in governance matters including voting in proxy contests. It seems that nearly three quarters of Disney’s retail investor base voted for Disney, thus playing a role in Disney being able to fend off the activists. Retail investors are usually also fans of the company in which they hold shares and therefore care about more than just the immediate price of shares. However, Pelts’s argument that the Disney’s share price was too low also included an ideological dimension. He had questioned Disney’s ‘woke’ casting choices. Retail investors, who largely consist of younger members of the population are more likely to support ESG strategies and this includes diverse casting for a company like Disney. Finally, Disney’s management did not take its retail investors for granted in this proxy contest. From creating animated videos telling retail investors how to vote, a video of Iger explaining why they should vote for him and the company rather than activists to calling on celebrity friends to publicly support Iger in the contest, Disney pulled out all the stops. One of these celebrity friends was George Lucas, the creator of the popular Star Wars franchise.
While retail investors have been known to coordinate their buying and voting decisions through online conversations, and following advice from finfluencers, these finfluencers are usually social media personalities with a large number of followers. However, celebrities can also influence retail investor behaviour and in this case, George Lucas can be seen as a celebrity finfluencer. As the number of retail investors increases, it will be important, especially for companies with large retail investor bases to learn to engage with retail investors and perhaps even use different kinds of finfluencers as and when required. As I discuss in a recent paper, the retail investor and finfluencer phenomenon extends beyond the U.S. and while contextual differences will be important, there will be important insights from Disney’s engagement of its retail investors for companies across the world.
THE HITCHHIKER'S GUIDE TO CORPORATE GOVERNANCE 