(Updates to include Neuberger Berman holding in paragraph 3,

Disney comment in paragraph 5 and Trian comment in paragraph 7)

    By Svea Herbst-Bayliss and Dawn Chmielewski

       NEW YORK, March 28 (Reuters) - With less than a week to

go before shareholders elect Walt Disney's board, the race for

votes heated up on Thursday as one institutional investor sided

with CEO Bob Iger and the company's directors, while another

backed hedge fund manager Nelson Peltz's Trian Fund Management.

    The New York City Retirement System, which owned $291

million worth of Disney stock at the end of last month, said the

entertainment giant should get more time to achieve the

strategic transformation it is working on under Iger, rejecting

the nominees from Trian and Blackwells Capital, another activist

fund that also wants board seats.

    Also on Thursday, investment firm Neuberger Berman, which

owned 1.4 million shares at the end of December according to a

regulatory filing, said it will vote to support Peltz and

Trian's second candidate, former Disney chief financial officer

Jay Rasulo, arguing the outsiders could play a critical role in

finding a successor to Iger, who has said he will leave at the

end of 2026.

    Blackwells on Thursday also ratcheted up the pressure on

Disney by suing the home of Mickey Mouse in a Delaware court for

information it says may point to possible disclosure violations

in dealings with hedge fund ValueAct Capital.

    Disney called the claims "baseless," and said the lawsuit

was a "desperate attempt to gain attention for their slate of

director candidates."  

    ValueAct once managed pension fund money for Disney, but

said it no longer oversaw those assets when it began investing

in Disney late last year. Its chief investment officer, Mason

Morfit, earlier this month offered public support for Iger and

the company's sitting directors at an investment conference.

    Trian declined to comment.

        Shareholders will vote on April 3 on who will end up

sitting on the company's 12-member board. The fight has become

the year's most closely watched boardroom battle with Disney

pointing to a raft of improvements and initiatives to persuade

investors to re-elect its directors.

    Peltz argues the company has lost its creative spark and

needs him and Rasulo, who was passed over for the top Disney job

years ago, to guide future decisions as board members.

    Blackwells, which is pushing for three seats, generally

supports Iger's vision, but said Disney should harness

technology better and consider separating its hotels and theme

parks into a separate company.

    LAST DITCH APPEALS

    All sides are making last-ditch appeals to big investors at

in-person meetings and through Zoom calls, people familiar with

the matter said. Disney has also stepped up advertising with

announcements drawing attention to the meeting.

    Disney's stock price has climbed 35% so far in 2024, but the

stock remains down nearly 40% from its record-high close in

March 2021. Disney has argued that its strong first-quarter

earnings and announcements, including plans to join forces with

Indian conglomerate Reliance Industries RELI.NS and offer more

entertainment options, shows Iger's turnaround plan is working.

    The activist investors have argued it is their pressure on

the company that has helped fuel the stock price gain.

    New York City Comptroller Brad Lander, who is responsible

for the New York City Retirement System, said the company's

shares "have performed well" and "boards are most effective when

members bring valuable perspectives and relevant experience and

are focused on the long-term health of the company."

    In the last days, proxy advisory firms ISS, Glass Lewis and

Egan-Jones have made recommendations, with ISS and Egan-Jones

backing Peltz, while Glass Lewis supported all the company's

incumbent directors.

    ISS argued that the current board has not performed well in

selecting someone to succeed Iger, and that Peltz, who has

served on many boards, would help ensure Iger's plans will be

pursued even after he leaves.

    ISS also wrote that while ValueAct's "investment team met

with Bob Iger on very limited occasions in the years prior to

its investment in Disney, (ValueAct chief investment officer and

co-CEO) Mason Morfit and Bob Iger do not have a personal

relationship."

    While some investors such as Neuberger Berman and New York

City have disclosed their votes, many, including big pension

funds, powerful mutual funds and index funds, have declined to

say how they will vote. Some big investors may wait to vote next

week, people familiar with their decisions said.

    Lander said that Peltz, who is running for a seat based on

his experience as a director on boards including Procter &

Gamble PG.N and Wendy's, should not be elected. "Nelson

Peltz’s troubling performance on other company boards including

Wendy’s raise concerns about the value he would bring to the

table, and we do not believe this would be beneficial to

preserving shareholder value," Lander said.

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Who speaks for Disney shareholders?    https://reut.rs/3PCwxfh

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(Reporting by Svea Herbst-Bayliss; Editing by Jonathan Oatis,

Nick Zieminski, Daniel Wallis and Leslie Adler)

((svea.herbst@thomsonreuters.com; +617 233 2138; Reuters

Messaging: svea.herbst.thomsonreuters.com@reuters.net))