USA 
United Kingdom
It’s that time of year again.
Not Christmas (just yet), but time for another boardroom dispute. Nelson Peltz, Founding Partner, Trian Partners, has nominated himself to join the Disney boardroom alongside Disney’s former CFO James 'Jay' Rasulo.
Peltz, Disney’s largest shareholder, has been embroiled in a “proxy war” for greater influence at the media giant. His dissatisfaction with the leadership of CEO Bob Iger is matched only by his frustration with the board’s close alignment and support of Iger.
“We can no longer sit idly by as the incumbent directors and their hand-picked replacements stand in the way of necessary change,” says Peltz. The board is “too closely connected to a long-tenured CEO and too disconnected from shareholders’ interests.”
Disney retorts in an official statement: “Disney has an experienced, diverse, and highly qualified Board.”
And how has this story played out in the media? Reuters describes it as a “bitter battle.” CNN takes a similar angle, claiming “the fight for Disney’s future just got serious”.
Unsettled boardroom, unhappy employees
Whilst this skirmish plays on, consider how this type of dispute disrupts employees at all levels of the business. Picture yourself and your colleagues as Disney employees attempting a productive morning’s work after reading these headlines on your morning commute.
When this type of dispute occurs at the Board level, and employees witness their organization’s leadership at loggerheads, it causes uncertainty. Now imagine this dispute has playing on for years with no clear resolution in sight.
HR Grapevine spoke with a former senior Disney executive, who wishes to remain anonymous, about this boardroom uncertainty and the impact it has on Disney employees:
“The Disney succession has been going on since 2011 and it’s grown toxic. It’s not merely a matter of who is CEO but it’s a distraction for every executive in the company in what has become a never-ending game of thrones.”
“It’s demoralizing and disruptive at every level,” the ex-VP continues. “The board is frankly negligent to let this go on until 2026.”
Amid all the chaos and external pressures that have plagued organizations over the past few years, disagreement among business leaders who should instead be establishing structure and consensus is far from reassuring.
HR leaders must therefore act during times of crisis and disruption to ease uncertainty among employees.
Short term actions, according to analysis from the O.C. Tanner Institute, includes investing in employee recognition and investment in culture. This can help alleviate the symptoms of uncertainty. In the long term, HR must increase its voice in the boardroom to tackle issues such as leadership disputes directly at the source.
Disagreement and debate are inevitable
Disney is, of course, not alone in its boardroom turmoil. OpenAI’s whirlwind November saw the board sack CEO Sam Altman; the Chairman of the Board Greg Brockman resign from his post; over 730 employees sign an open letter demanding resignation from the entire board and Altman’s reinstatement; and OpenAI announce Altman’s reinstatement, all in less than 5 days.
Whilst Altman is back at the helm, the debacle will live long in the memory of employees. OpenAI faces fresh criticism over the diversity of its board, disagreement around the use of AI is far from resolved, and over 90% of employees have publicly supported criticism about the board.
Of course, there are always periods of change and transformation in the leadership and boardroom.
Disagreement, diversity, and healthy debate are the hallmarks of a thriving boardroom, provided this is balanced with respect and inclusivity. The Financial Reporting Council found higher levels of gender diversity of FTSE350 boards positively correlate with better future financial performance.
But Disney’s “toxic” and “demoralizing” disruption is a far cry from such careful and controlled boardroom debate.
Conclusion: A tale of two clubs
Boardroom disruption occurs in all industries. If you’ll forgive this British editor’s obsession with soccer, let’s take it as an example. Two of the most popular British clubs in the U.S. are Manchester United F.C. and Wrexham A.F.C. Both are going through boardroom changes.
The dust is settling on Wrexham A.F.C.’s takeover by now chairmen Rob McElhenney and Ryan Reynolds, with the board on excellent terms with players, managers, and fans (customers) alike.
A possible minority stake acquisition in Manchester United F.C. from Sir Jim Ratcliffe is close to completion, but progress is grinding and there is no real clarity from the hugely unpopular Glazer family who own the club and sit on the board of directors.
One club has been on a consistent upward trajectory with consistent praise from all involved at the club. The other is a soccer club in turmoil, seemingly unable to escape scandal and with staff concerned about job security. No prizes for guessing which is which.
Unfortunately, not all organizations will have owners as adept and eager to address uncertainty or embrace debate as willingly as McElhenney and Reynolds.
It is therefore crucial that HR intervene in such situations to help employees cope with uncertainty, rebuild trust in business leadership, and establish a greater presence for HR in the boardroom itself.
