Disney paid ValueAct millions in fees before winning its support in proxy fight, activist says

Activist investor Blackwells said Monday that Disney‘s board had not disclosed that shareholder ValueAct Capital had a financial relationship with the entertainment company, putting the firm’s endorsement of Disney’s board under scrutiny.

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 stretching back to 2013.

The activist, 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, Blackwells and ValueAct did not respond to requests for comment outside of normal business hours. A spokesperson for Trian declined to comment.