Oklahoma Firefighters Pension & Retirement System, Oklahoma City, filed suit against Cannae Holdings and others, alleging breach of fiduciary duties through self-dealing and diverting value from the company to its chairman and management team.
In the suit, filed Sept. 23 in Delaware Chancery Court, the $2.9 billion pension system accused the defendants of "lining their own pockets" through "a longstanding and systematic pattern of self-dealing" that resulted in diverting "substantial value from the company to themselves."
The firm's chairman and management team outsourced management of the company to Trasimene Capital Management, another private company owned by Cannae Chairman William P. Foley II, to increase Mr. Foley's and the management team's compensation "and insulate their self-dealing from public scrutiny," according to the suit.
In outsourcing management to Trasimene Capital, significant costs were imposed on Cannae, which the plaintiff is a shareholder, resulting "in windfalls" for Mr. Foley "and his management team," the suit said.
In response, a spokeswoman for Cannae said in an email: "The Board of Directors of Cannae determined that the external management agreement was in the best interests of Cannae and all of its shareholders, which has proven to be the case. Cannae has outperformed the S&P 500 by more than 220% since the management agreement was entered into in August 2019. Further, 87% of Cannae's shareholders voted in favor of Cannae's 2019 say-on-pay compensation program at its most recent annual shareholders meeting in June 2020."
The statement added that the plaintiff "completely ignores these facts and the significant value realized by Cannae shareholders. The complaint that the plaintiff filed is wholly without merit and a gross distortion of the company's track record under its chairman and a highly talented, independent and experienced board of directors. Cannae will vigorously defend this suit."
Ned Weinberger, a partner in the law firm Labaton Sucharow LLP and chief counsel for the plaintiff, declined to comment.