By Svea Herbst-Bayliss

NEW YORK (Reuters) - Activist Nelson Peltz received a powerful endorsement on Thursday when proxy advisory firm Institutional Shareholder Services (ISS) recommended Disney shareholders elect him to the entertainment conglomerate's board, in a blow to the company.

ISS, whose recommendations can sway hundreds of investors' choice, said Peltz, a significant shareholder at Disney, would be able to ensure the board is doing its job well as it tackles questions of CEO succession and strategy at the home of Mickey Mouse.

"Dissident nominee Peltz, as a significant shareholder, could be additive to the succession process, providing assurance to other investors that the board is properly engaged this time around," the report seen by Reuters said.

Peltz's Trian Fund Management is vying for two board seats, one for Peltz and the other for former Disney financial chief Jay Rasulo, while another activist firm, Blackwells Capital, is pushing for three board seats.

The investment firms said Disney bungled plans for life after CEO Bob Iger, lost its creative spark and failed to properly harness new technology.

ISS said shareholders should abstain from voting for Rasulo, all three Blackwells candidates and current director Maria Elena Lagomasino.

ISS is the second proxy advisory firm to issue its recommendation on how investors should vote at Disney's annual meeting on April 3.

Glass Lewis on Monday recommended shareholders reelect all 12 of the company's directors instead of adding any of the dissident candidates.

(Reporting by Svea Herbst-Bayliss; editing by Jonathan Oatis)