- Blackwells Capital LLC reveals ValueAct Capital Management, L.P. has received millions in management fees from Walt Disney Co. (NYSE: DIS)
- Blackwells says ValueAct has earned fees of roughly $55 million to $95 million for overseeing Disney pension assets
- ValueAct is a public supporter of Disney board amid ongoing proxy fight while Blackwells has nominated own slate of three directors to board
- Corporate governance expert Charles Elson says “it’s a conflict that should be disclosed” and “reflects rather poorly” on ValueAct
- Disney did disclose it had a similar asset management relationship with Nelson Peltz’s Trian Fund Management, which also has a slate running against board
By John Jannarone and Karen E. Roman
Blackwells Capital LLC published a report Monday revealing a potential disclosure issue in the Walt Disney Co. (NYSE: DIS) fight: Fellow shareholder ValueAct Capital Management, L.P. was apparently paid handsomely in recent years to manage hundreds of millions in company pension assets.
ValueAct has earned fees of roughly $55 million to $95 million for managing over $350 million of Disney’s pension fund assets, Blackwells said in a letter to shareholders accompanying the report. Blackwells cites public filings going through 2022 but such filings for 2023 and 2024 haven’t been submitted yet.
The report comes amid a heated proxy fight involving multiple parties. ValueAct has stood with the Disney board and in early January the company announced an “Information-Sharing Arrangement” with ValueAct. Disney has subsequently “trumpeted ValueAct’s endorsement in proxy materials mailed to millions of shareholders, press releases, letters to shareholders, one-off engagements with shareholders, and in a recent presentation delivered to proxy advisory firm, Institutional Shareholder Services,” Blackwells points out.
There’s good reason to believe that the Disney board would have known about the management fees – given it mentioned the broader topic just this week. Indeed, in a presentation Monday, the company points out that Nelson Peltz’s Trian Fund Management, another investor who opposes the current board, was paid to manage pension assets until being fired from the role in 2021.
One leading corporate governance expert says the lack of transparency is concerning. “it’s a conflict that shareholders should be disclosed,” said Charles Elson, Founding Director, Weinberg Center for Corporate Governance at the University of Delaware. “It reflects rather poorly on ValueAct for several reasons.”
Professor Elson pointed out that the relationship with Disney’s pension is significantly large enough to disclose and that it’s emblematic of a concern that industry observers have monitored for decades. “This goes back to the 80s when so many companies had defined benefit plans and there were concerns that mutual funds weren’t suited to support shareholder activism when it was needed,” he said.
A spokesman for ValueAct said that there was no ongoing commercial relationship between Disney and ValueAct when the Information-Sharing Agreement was signed in January. By that time, Disney had fully withdrawn its investment in ValueAct and the firm no longer managed any money for Disney when it built its equity stake last year, the spokesman said.
Disney didn’t respond to a request for comment.
Blackwells argues that its revelation should encourage the company to be more transparent about is relationship with ValueAct. “The Information-Sharing Agreement, the information shared under it, and details of the pre-existing, and current, Disney/ValueAct relationship on long standing is material information for shareholders. Blackwells’ diligence is proof positive that these disclosures must be made immediately,” Blackwells said.
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