ValueAct Capital Raked in $95 Million in Fees Managing Disney Pension Fund Assets, Blackwells Capital Says

The firm had no longer managed money for Disney when it built a stake in the entertainment giant last year, according to an individual familiar with the matter

BEVERLY HILLS, CALIFORNIA – JANUARY 07: (L-R) ValueAct Capital co-CEO Mason Morfit and actress Jordana Brewster attend the 81st Annual Golden Globe Awards at The Beverly Hilton on January 07, 2024 in Beverly Hills, California. (Photo by Amy Sussman/Getty Images)

Blackwells Capital is taking aim at Disney’s financial relationship with ValueAct Capital in a new letter to shareholders.

The firm is accusing the entertainment giant of failing to disclose that the activist investor and its affiliates have taken in a cumulative $95 million in fees since 2013 for managing over $350 million of Disney’s pension fund assets.

In a white paper, Blackwells cited filings from the Department of Labor that showed ValueAct was managing $355 million in Disney pension funds in 2022. It noted that filings for 2023 and 2024 were not available, but that it suspects ValueAct continues to manage Disney’s pension fund assets.

“The Board has repeatedly 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 wrote. “ValueAct’s management of Disney’s pension funds is not disclosed anywhere in any of the referenced communications. Meanwhile, Disney’s entire shareholder franchise population has been led to believe that ValueAct provided its independent and unqualified support of the Board independently.”

Blackwells proceeded to question if the board knew about ValueAct’s management of Disney’s pension funds, if its audit committee reviewed the matter in advance or if it violated Disney’s code of ethics and commitment to transparency by failing to disclose the relationship after publicly accepting ValueAct’s endorsement.

An individual familiar with the matter told TheWrap that ValueAct had no longer managed any money for Disney when it built its stake in the company last year and that Disney had fully withdrawn its investment in ValueAct.

A spokesperson for ValueAct declined to comment. Representatives for Disney did not immediately return TheWrap’s request for comment.

ValueAct isn’t the only firm that has managed money for Disney. In a new presentation released on Monday, the company noted that Trian Fund Management co-founder Nelson Peltz, who has launched his own campaign for seats on Disney’s board, was terminated as an investment manager of the company’s pension plan in 2021 after underperforming the S&P 500 on an annualized basis over eight years.

The letter comes after Disney struck an information sharing agreement with ValueAct in January as it looks to fend off a push for board seats by Blackwells and Trian Fund Management. ValueAct released a white paper to investors last week praising Disney for its recent efforts to lean into its theme parks and moving beyond the streaming wars.

Blackwells has previously been critical of Disney and ValueAct’s agreement, going as far as issuing a formal demand that the information be made available to them.

“The Board denied our demand, asserting that we had not explained sufficiently our reasons to believe the Company’s relationship with ValueAct might be important,” Blackwells said. “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. We urge fellow shareholders to join us in demanding that the Board immediately take all necessary steps to file updated proxy materials with full disclosure of the ValueAct arrangement—so that shareholders can have the information needed to cast votes that are fully informed.” 

Blackwells has nominated Tribeca Film Festival co-founder Craig Hatkoff, former Warner Bros. and NBCUniversal executive Jessica Schell and TaskRabbit founder Leah Solivan to stand election at Disney’s annual shareholder meeting, which is scheduled for April 3. It has also called on Disney to prioritize artificial intelligence and spatial computing and proposed a real estate and strategic asset review, including a potential split of the company.

Disney said that a break-up of the company would “destroy key competitive advantages.”

It noted that it has already rationalized its real estate portfolio and divested non-core assets and that putting its assets into a real estate investment trust would “impose burdensome limitations and reduce operational control” in its theme parks and could impair the company’s ability to “make changes to attractions, sell integrated vacation packages and other examples that would have negative implications to potential profit growth.”

“We are not going to jeopardize that powerful value-creation engine by focusing on short-term financial engineering,” the company said.

Additionally, the company argued that it is already a “leader in deploying emergent technologies,” citing examples including its partnership with the Apple Vision Pro and the parks business’ work on AI over the last decade.

Disney has previously rejected Blackwells’ nominees, arguing that they “do not possess the appropriate range of talent, skill, perspective and/or expertise to effectively support Disney’s building priorities in the face of continuing industry-wide challenges.”


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