Disney paid shareholder ValueAct millions in fees as part of a prior relationship

Disney paid shareholder ValueAct millions in fees as part of a prior relationship. This arrangement likely involved compensation for services such as investment advice, consultation, or management of assets. Such payments are common in shareholder-investor relationships, reflecting the value and expertise provided by investment firms like ValueAct.

‍KEY POINTS

• ValueAct managed more than $355 million in Disney pension funds prior to backing the company in a proxy fight with Nelson Peltz’s Trian Partners, a rival activist said.
• Blackwells raised questions about Disney’s relationship with Mason Morfit’s ValueAct, suggesting that the company has heralded Morfit’s support but not been fully transparent about ValueAct’s financial benefit from the company.
• ValueAct has collected a cumulative $95 million in fees from Disney since 2014, Blackwells said.

Activist investor Blackwells said Monday that Disney’s board had not disclosed that shareholder ValueAct Capital had a financial relationship with the entertainment company, raising questions about the board’s information sharing amid a multi-party proxy fight.

Mason Morfit and his $12 billion investment firm ValueAct were heralded as “constructive” shareholders by Disney CEO Bob Iger in January, when the company secured ValueAct’s backing ahead of an expected proxy fight with Nelson Peltz’s Trian Partners.

Blackwells Capital, which previously voiced support for Iger and Disney management, said ValueAct had been managing more than $350 million in Disney pension funds in a relationship dating from 2013 to at least 2022.

ValueAct was not managing Disney pension assets by the time it built a stake in the company in 2023, a person familiar with the matter told CNBC. Disney had fully withdrawn its investment in the $12 billion investment firm by that time, and ValueAct was not managing money for Disney when the investment firm signed an information sharing agreement with the company in January, the person said.

Still, the prior relationship is likely to muddy the waters given Disney has held up Morfit’s support in its proxy filings.

Blackwells, which has nominated its own slate of directors in a long-shot bid, said that Disney allowed its shareholders to believe that Morfit’s fund “provided its independent and unqualified support of the Board independently.”

Blackwells highlighted 2022 filings from the Department of Labor that showed ValueAct was managing some $355 million in Disney pension funds. It said filings for 2023 and 2024 were not available.

Blackwells has estimated that Disney paid a cumulative $95 million in fees to ValueAct from 2014 to 2022.

Disney and Trian have been in the throes of a proxy fight since October, with the fight intensifying as Disney’s annual shareholder meeting nears. Trian says Disney’s board has been too connected to Iger, who ousted his hand-picked replacement Bob Chapek to return as CEO with the board’s blessing.

When Peltz began to re-amass a stake, Disney’s share price had fallen dramatically from 2021 highs to trade at levels not seen since 2014. Disney has repeatedly voiced its support for Iger and has highlighted that its directors have experience overseeing successful succession planning.

Disney has suggested that Trian bears ill will towards the company after the investment firm was fired as a pension fund manager.

In proxy filings, Disney has also said that the company is executing on a plan to invest in its experiences and streaming businesses. It has also touted ValueAct and Morfit’s support in presentations and securities filings.

“Can this Board believe that shareholders are able to evaluate the significance of ValueAct’s endorsement without a full understanding of the relationship?” Blackwells asked.

Representatives for Disney and Blackwells did not respond to requests for comment. A spokesperson for Trian declined to comment.

Source: CNBC‍