In a significant blow to Walt Disney, activist investor Nelson Peltz has received a powerful endorsement in his fight against the entertainment conglomerate. Proxy advisory firm Institutional Shareholder Services (ISS) has recommended that shareholders elect Peltz to the board of directors. ISS's recommendations hold substantial influence over investors' voting decisions.

Peltz, a major Disney shareholder, has been touted by ISS as someone who can ensure the board fulfills its responsibilities effectively in addressing crucial issues such as CEO succession and strategic decisions at the iconic home of Mickey Mouse. With the endorsement from ISS, Peltz's chances of securing a board seat have increased.

The recommendation comes at a time when Disney CEO Bob Iger is actively garnering support from influential figures, including Emerson Collective founder and president Laurene Powell Jobs and Star Wars creator George Lucas. The ISS report, accessible to Reuters, states that Peltz, as a substantial shareholder, could contribute to the succession process and provide reassurance to other investors regarding the board's engagement.

Peltz's hedge fund, Trian Fund Management, is competing for two board seats, one for Peltz himself, and the other for former Disney financial chief Jay Rasulo. Another activist firm, Blackwells Capital, is also pushing for three board seats. This board battle, one of the most fiercely contested and closely monitored this year, pits Peltz, who claims to work effectively with targeted companies, against Iger, a highly proficient CEO in the media industry.

Both Peltz and Blackwells Capital have criticized Disney's handling of plans for the post-Iger era, suggesting that the company has lost its creative spark and failed to capitalize on new technologies. Disney has previously disputed the qualifications of candidates nominated by the hedge funds and has strongly disagreed with ISS's recommendation in Peltz's favor, stating that he does not bring additional skills to the board.

The shareholders' vote is scheduled for April 3rd, and both sides have successfully garnered support from influential figures to advocate for their cause. While Lucas and JPMorgan banker Jamie Dimon are backing Iger, several business executives have publicly voiced their support for Peltz.

ISS has advised shareholders to abstain from voting for Rasulo, all three Blackwells candidates, and current director Maria Elena Lagomasino. ISS expressed concerns over potential friction caused by Rasulo on the board, as he was overlooked for the CEO role in the past. Lagomasino was also singled out for criticism, with ISS suggesting she bore more responsibility than other directors for failing to find a suitable successor to Iger.

Earlier this week, ISS's rival firm, Glass Lewis, recommended that shareholders reelect all twelve of Disney's current directors instead of adding any dissident candidates. While acknowledging positive operational changes and the addition of two new directors made by Disney since Iger's return to the helm, ISS argues that more external oversight is necessary to ensure a smooth transition after Iger's departure.

As the annual meeting date approaches, experts predict that social media will play an increasingly prominent role in escalating the battle between the two sides. Prominent business executives, including Francis Blake, Ali Dibadj, and Thomas J. Usher, who have previously been targeted by Peltz, have voiced their support and written to the Disney board urging them to collaborate with Peltz for the benefit of all shareholders.