The Secret Pact

In a recent revelation, Blackwells Capital has called into question the independence of ValueAct Capital's support for Disney's board. This scrutiny emerged following disclosures that ValueAct, a firm with a notable $12 billion under management, has had a financial relationship with Disney since 2013, managing over $350 million of Disney's pension funds.

Disney had previously secured ValueAct's support, underlining it as a constructive endorsement against the backdrop of a looming proxy battle with Trian Partners, led by Nelson Peltz. Disney's CEO, Bob Iger, praised ValueAct and its leader, Mason Morfit, for their backing earlier this year, a move that now faces critical examination due to the undisclosed financial connections.

Blackwells Capital, which has also thrown its hat into the ring by nominating directors in an attempt to influence Disney's direction, pointed out that the relationship between Disney and ValueAct could compromise the perceived independence of ValueAct's backing. This allegation is backed by Department of Labor filings from 2022, revealing ValueAct's management of significant Disney pension assets, with Disney purportedly paying around $95 million in fees to ValueAct from 2014 to 2022.

As Disney navigates a proxy fight initiated by Trian since last October, the stakes are high with Disney's annual shareholder meeting on the horizon. Trian has criticized Disney's board for its closeness to Iger, especially after Iger's return as CEO, replacing his own successor, Bob Chapek.

In defense, Disney has emphasized its confidence in Iger and the board's ability to oversee successful leadership transitions, noting the stock price challenges and strategic focuses on expanding its experiences and streaming services. Despite the ongoing proxy battle and scrutiny, Disney continues to highlight the support from ValueAct and Morfit in various communications, raising questions about the influence of undisclosed financial relationships on shareholder perceptions.

As this intricate scenario unfolds, all eyes are on Disney, ValueAct, and Trian, with stakeholders eagerly awaiting further comments from the involved parties.