March 5, 2024
Money Stuff: Twitter’s Executives Want Their Money
Vote-buying
There is a three-way proxy fight going on at Walt Disney Co. Nelson Peltz’s Trian Fund Management LP has nominated two candidates for Disney’s board of directors, Blackwells Capital LLC has nominated three other candidates and Disney opposes all of them. There are competing websites. Blackwells owns about 157,000 shares of Disney stock (about $17.9 million worth), or about 0.0086% of the 1.8 billion shares outstanding. Trian’s group owns about 32.3 million shares ($3.7 billion), or about 1.76% of the stock.[4] Disney Chief Executive Officer Robert Iger owns about 205,000 shares ($23 million, 0.011%), plus another 2.2 million shares’ worth of options. The biggest shareholders are the usual “Big Three” index fund firms (Vanguard, BlackRock, State Street).
So lot of votes are up for grabs: This is not a proxy fight between an activist with a big stake and a CEO with a big stake, where each side already owns a lot of shares, but a battle of persuasion where three smallish shareholders will try to get the rest of the shareholders to vote for their platforms.
And then there’s this:
Mom-and-pop investors are also being courted for their votes on a new marketplace called Shareholder Vote [Exchange], which runs auctions for shareholders' proxy votes. Disney is unusual because individual investors own more than one-third of Disney's 1.8 billion shares, more than the typical company, per The Wall Street Journal.
A bidder on Shareholder Vote [Exchange] is offering as much as $100,000 for 500,000 proxy votes, or 20 cents per vote, the most the site has seen since its launch two years ago, said cofounder and COO Steven Xu.
Xu said Shareholder Vote [Exchange] doesn't reveal the names of the bidders but confirmed the bid is from a current shareholder. Trian and Blackwell didn't immediately respond to requests for comment from Business Insider about if they're the bidder in question.
Here’s the web page for the auction. As of today I see a bid of $100,000 for 500,000 votes, and 12,417 votes listed for sale. So the market is not particularly close to clearing. Also, if you bought 500,000 votes, that would get you 0.027% of the votes, which, I mean, maybe that will make the difference between getting your nominee elected and not?
Ehh. I don’t see it. We have talked about the Shareholder Vote Exchange a couple of times before. It’s fun! Why not. The idea of being able to sell shareholder votes is clearly icky to some people; I think it is, like, morally fine but mechanically and legally messy. I wrote:
Surely the real high-dollar case for buying shareholder votes is in contested proxy fights, where some activist investor has millions of dollars on the line and wants to get its own slate of directors elected. (Also in contested takeovers.) And there I just have trouble imagining big activist shareholders buying votes in proxy fights this way, in part because the disclosure and reputational issues seem like they’d be a mess. The distinguishing feature of proxy fights and hostile takeovers is that everyone sues everyone else about everything, and also “bedbugs” them to the US Securities and Exchange Commission, calling up the SEC to say “hey did you notice our opponents doing something illegal?” Can you imagine the hay that some corporate managers would make out of an evil activist hedge fund buying votes?
And, sure, if you buy 10% of the vote for 20 cents per share (the stock closed yesterday at $113.69), that’s going to go to court. If you bid 20 cents per share for 0.027% of the votes … I think no one will care? This is good publicity for Shareholder Vote Exchange, but I’m not sure it’s anything more than that.
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How the tables have turned. do the activists even have a chance? Their ownership is kind of pathetic. 0.0086% for Blackweels and 1.7% for Trian. Are the activists that desperate?
