Blackwells Capital Reveals Failure by the Disney Board to Disclose in this Proxy Fight that ValueAct Has Earned Fees from Managing Disney Pension Funds since 2013
$DIS
Dear Fellow Disney Shareholder:
As you may know, on January 3, 2024, The Walt Disney Company (“Disney” or the “Company”) issued a press release announcing an “Information-Sharing Arrangement” between the Company and ValueAct Capital Management, L.P. (“ValueAct”). The press release contained a glowing endorsement by ValueAct of Disney’s board of directors (the “Board”) and management of Disney.
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 (“ISS”). 1
Blackwells diligence revealed that the Board failed to disclose in the press release that ValueAct or its affiliates have been managing over $350 million of Disney’s pension fund assets, and that ValueAct has been earning fees ranging from approximately $55 million to $95 million for the services provided to Disney’s pension fund since as early as 2013.2
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.
We believe shareholders should consider the following:
●Can this Board believe that shareholders are able to evaluate the significance of ValueAct’s endorsement without a full understanding of the relationship?
●Did the Board know about ValueAct’s management of Disney’s pension funds prior to authorizing the January 3rd press release?
oIf yes, how could they hide this information from shareholders?
oDid the Audit Committee of the Board review this matter in advance?
●How could the Board not know of this relationship when their own investor presentation dated March 11, 2024, mentions Trian’s identical role in managing Disney pension fund assets?
●Why didn’t ValueAct and its principal, Mason Morfit, insist on disclosing ValueAct’s management of Disney’s pension funds in the January 3 press release—when, as fiduciaries to these funds, they certainly knew about these facts?
oWhy didn’t Mr. Morfit mention these important facts in his presentation in support of the Board in front of hundreds of attendees at the Council of Institutional Investors conference last week?
●Did the Board violate Disney’s Code of Ethics3 and commitment to transparency4 by failing to disclose ValueAct’s management of Disney’s pension funds after publicly accepting ValueAct’s endorsement?
On numerous occasions, Blackwells has publicly demanded disclosure of Disney’s relationship with ValueAct, including the release of the Information-Sharing Agreement. On February 16, 2024, Blackwells submitted a formal demand under Delaware law that this information be made available to Blackwells.5 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.6
The Information-Sharing Agreement, the information shared under it, and details of the pre-existing, and current, Disney/ValueAct relationship 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 three incredibly qualified nominees for election at Disney’s 2024 annual meeting of shareholders (the “Annual Meeting”): Craig Hatkoff, Jessica Schell and Leah Solivan. Our nominees add expertise in the needed areas of content, media, technology and best in class governance.
For more information about our campaign, including our thoughts on improving governance such that Disney will limit future issues like the ValueAct one, please visit www.TheFutureOfDisney.com.
Sincerely,
Jason Aintabi
Chief Investment Officer
Blackwells Capital LLC
Source:
https://www.sec.gov/Archives/edgar/data/1720183/000121390024021583/ea0201601-dfan14a_blackwells.htm