DEFA14A: Cannae Defends Board, Highlights Strategic Transformation

Cannae Holdings urges shareholders to support its director nominees and strategic shift towards private investments, countering Carronade Capital's short-term agenda.

Summary

• Cannae Holdings released an investor presentation in connection with its 2025 Annual Meeting of Shareholders on December 12, 2025.
• The company is defending its four director nominees (Erika Meinhardt, Barry B. Moullet, James B. Stallings, Jr., and Frank P. Willey) against Carronade Capital's slate.
• Cannae has executed a strategic transformation over the past 21 months, shifting its portfolio from 70% public equities to 80% proprietary private investments.
• Nearly $500 million has been returned to shareholders through share repurchases, representing 34% of shares outstanding, with an expectation to reach over 50% cumulatively since 2021 by year-end.
• A $0.60/share annual dividend has been established to provide consistent capital return.
• Operating costs were reduced by terminating the external management structure, cutting management fees from $37.7 million in 2023 to $7.6 million on a go-forward basis.
• The Board has been refreshed with three new independent directors in 2024 and 2025, and a new independent Chairman and Chief Executive Officer were appointed.
• The discount to Net Asset Value (NAV) has been reduced by 21% from December 31, 2023, to October 31, 2025.
• Cannae argues that Carronade's criticisms are backward-looking and its proposals, such as a spin-off of public holdings, have either already been implemented or pose significant risks like the loss of tax benefits and restricted liquidity.
• Cannae asserts that Carronade's nominees lack the relevant experience and operational expertise needed for Cannae's permanent capital vehicle business model.

Sentiment

Score: 8

Explanation: The filing presents a strong, proactive defense against an activist investor, highlighting significant positive financial and strategic achievements (NAV discount reduction, capital return, cost cutting, portfolio transformation, strong governance). The tone is confident and assertive, backed by specific metrics and dates. While acknowledging past challenges (SPAC impairments), it frames them as reasons for the successful transformation.

Positives

• Portfolio transformed from 70% public equities to 80% proprietary private investments, offering unique investment opportunities.
• Returned nearly $500 million to shareholders via share repurchases (34% of shares outstanding) since February 2024, with an expectation to reach over 50% cumulatively since 2021 by year-end.
• Established a $0.60/share annual dividend, increased by 25% in 2025.
• Reduced operating costs by terminating external management, cutting fees from $37.7 million in 2023 to $7.6 million on a go-forward basis.
• Board refreshed with three new independent directors in 2024 and 2025, bolstering critical expertise in leadership, portfolio management, and corporate governance.
• Successful leadership succession with a new independent Chairman and Chief Executive Officer.
• Achieved a 21% reduction in the discount to NAV since the beginning of 2024 (from December 31, 2023, to October 31, 2025).
• Net realized gains on investments since inception total $3.3 billion.
• Demonstrated ability to leverage permanent capital and duration to optimize investment returns, exemplified by Dayforce holding returning 5x on invested capital over 17 years.
• Strategically disposed of approximately $1.1 billion in public assets (Dun & Bradstreet, Dayforce, Alight, Paysafe) to refocus the portfolio.
• Black Knight Football (AFC Bournemouth) achieved nearly 30% revenue growth over the first three seasons, with commercial revenue doubling, and improved Premier League standing from 15th to 9th place.
• Black Knight Football achieved a $630 million valuation and a Top 50 Most Valuable ranking (Sportico).
• Internalized management structure reduced the termination fee from $40 million to $20 million.
• Initiated a Board declassification process in 2025, subject to shareholder approval, to be fully declassified by 2028.
• Executive compensation philosophy emphasizes pay-for-performance, shareholder alignment, and competitiveness, with management fees declining significantly.
• Received strong commendations from analysts (RBC Capital, Oppenheimer) regarding strategy and leadership.
• Mr. Foley's compensation arrangement retains him as an engaged director, and he has helped create approximately $3.3 billion in realized value for Cannae and its predecessors, and over $80 billion in public company value over his career.

Negatives

• Carronade Capital is seeking to replace four highly qualified, independent directors with a slate focused on distressed debt and restructuring, which Cannae views as irrelevant and threatening to its long-term strategy.
• Carronade's campaign threatens to derail Cannae's focus on long-term value by imposing a short-term agenda, such as a spin-off of public holdings.
• Carronade's nominees are criticized for lacking the necessary background and operational expertise for Cannae's business model.
• Carronade's proposal to spin public holdings would restrict liquidity and fail to account for the loss of significant tax benefits.
• Carronade's criticisms are backward-looking and ignore significant structural and long-tailed initiatives implemented by Cannae since February 2024.
• Carronade's nominees have limited public company board experience and no experience as public company executives.
• Cannae highlights that Carronade's nominees (Dennis Prieto, Mona Aboelnaga, Benjamin Duster, Chrie Schaible) are unqualified, interconnected, and have poor track records or irrelevant experience (e.g., distressed debt, short-term board stints, failed CEO roles).
• Past portfolio challenges were largely driven by public SPAC investments with lower ownership stakes, leading to impairment charges (e.g., Paysafe, Sightline System, Alight).
• NAV discounts are common for companies investing in private companies due to illiquidity and less frequent valuations, and these discounts may widen as the private asset focus grows.

Risks

• Risks associated with the ability to successfully operate businesses outside traditional areas of focus.
• Changes in general economic, business, and political conditions, including consumer spending, business investment, government spending, the volatility and strength of the capital markets, investor and consumer confidence, foreign currency exchange rates, commodity prices, inflation levels, changes in trade policy, tariffs on goods, and supply chain disruptions.
• Risks associated with the Investment Company Act of 1940.
• Risks associated with potential inability to find suitable acquisition candidates, difficulties in integrating acquisitions, or acquisitions in lines of business that will not necessarily be limited to traditional areas of focus.
• Significant competition that operating subsidiaries face.
• Risks related to being the subject of a proxy contest.
• Carronade's demands to spin public holdings ignore critical consequences directly risking shareholder value by eliminating significant tax-loss benefits, restricting liquidity, and increasing risk for shareholders as such a distribution could put downward pressure on these stocks as investors attempt to liquidate their positions.

Future Outlook

Cannae expects to continue its strategic transformation, focusing on proprietary private investments to drive long-term value creation and stock price appreciation. The company plans to continue returning capital to shareholders through dividends and share repurchases, funded by public asset disposals. Management aims to improve performance and value within its portfolio companies by leveraging deep industry expertise. The Board is committed to strengthening corporate governance, including the declassification of the Board by 2028, subject to shareholder approval.

Management Comments

• "We are asking for your support to continue this plan to build durable, long-term shareholder value under strengthened independent Board oversight and sharpened capital discipline."
• "We believe our four nominees, Erika Meinhardt, Barry B. Moullet, James B. Stallings, Jr., and Frank P. Willey, bring the right mix of experience in portfolio management, operations, technology/cyber, legal and risk management, and governance to oversee our strategy."
• "We are going to be much more focused on private investments going forward. I think it works better if you think of what Cannae is and the capital that it has and how we can most effectively leverage our permanent capital...we like the public businesses that we have but I think you'll see us sell down those names over time and look to reinvest in private businesses." Ryan Caswell, February 2024
• "Our strategy has three main levers, including improving the performance and valuation of our portfolio companies, making new investments primarily in private companies that will grow NAV, and return capital to shareholders, which until today was done primarily through Cannae share repurchases at a discount to NAV." Bill Foley, May 2024
• "As Bill noted earlier, private company investments have been a driving force behind Cannae's success historically and we believe a more efficient use of Cannae's capital. We are looking for new investments that will grow NAV and ideally provide operating cash flow to Cannae. We are focused on acquiring profitable businesses where we have knowledge of the sector, relationships with industry executives and can add value through our ownerships." Ryan Caswell, May 2024
• "Going forward, investment size would be in the $100 million-plus type of range....I do think we'll look at some bigger stuff, but I don't believe that you'll have some of the larger deals that we did historically." Ryan Caswell, November 2024
• "The first part of our plan was to rebalance our portfolio away from our public company investments...Following the D&B sale, approximately 22% of our assets will be in public company shares. We believe this change better positions Cannae as a permanent capital vehicle, which owns proprietary and differentiated assets." Ryan Caswell, August 2025
• "Since we announced our strategic plan in February 2024, Cannae has returned approximately $414 million in total share buybacks and dividends, demonstrating a consistent plan to return capital to our shareholders and close the NAV gap. We also continue to opportunistically look to invest capital in attractive businesses that can generate outsized returns." Ryan Caswell, August 2025

Industry Context

The filing positions Cannae as a permanent capital vehicle and opportunistic investor across various industries, regions, and market caps, actively managing its portfolio. It differentiates itself from closed-end funds, BDCs, and distressed debt investors. The company highlights its unique ability to source private investment opportunities inaccessible to most public investors, particularly in sports teams and ventures (e.g., Black Knight Football), consumer, and financial services. The proxy contest itself reflects a broader trend of activist investors challenging corporate boards, often pushing for short-term value creation strategies versus management's long-term plans. Cannae's shift from public equities to private investments aligns with a strategy to reduce NAV discount and leverage operational expertise in less liquid, higher-control assets.

Comparison to Industry Standards

• Cannae's business model has no true public market peers but shares characteristics with Closed-End Funds/BDCs (e.g., Trinity Capital, Hercules Capital) and Diversified Holding Companies (e.g., Compass Diversified, Howard Hughes).
• Cannae explicitly states it is not a closed-end fund, a BDC, or a distressed debt investor.
• A comparison to Compass Diversified shows Cannae's TSR since inception (June 23, 2014) and since transformation announcement (February 20, 2024) is presented, but Compass disclosed accounting irregularities in May 2025, making direct comparison imperfect.
• FNF Title, under Ms. Meinhardt's leadership, maintained adjusted margins approximately 71% higher than competitors (17.4% vs 10.1% competitor average) in her last five years.
• Stantec Inc. (where Douglas K. Ammerman is Chairman) has overseen +1,509% TSR since he joined the Board in 2011.
• FNF TSR of +576.1% outperformed the MSCI AC World Insurance Index (+204.2%) from October 2005 to January 2024.
• Carronade's nominees are criticized for poor track records, including Mona Aboelnaga's directorships at Perpetual Limited (TSR of -35.5% vs +61.0% for MSCI AC World Capital Markets Index) and Webster Financial Corp (TSR of +6.5% vs +75.6% for MSCI AC World Bank Index), and Benjamin Duster's board service at Republic First Bancorp which filed for bankruptcy.
• Cannae's investment in Black Knight Football was made at approximately 1x revenue, while recent transaction comps in the Premier League (Everton/The Friedkin Group) are higher at 2-3x revenue.

Management Changes

Corporate Governance

Legal Proceedings

• The company is currently engaged in a proxy contest with Carronade Capital, which involves a solicitation of proxies from shareholders for the 2025 Annual Meeting.

Related Party Transactions

• Mr. Foley's compensation arrangement as part of the leadership succession, which was unanimously approved separately by both Cannae's Compensation Committee and Related Person Transaction Committee.

Stakeholder Impact

• Shareholders: Direct impact through significant capital returns ($500 million in repurchases, $0.60/share annual dividend), a 21% reduction in NAV discount, potential for long-term value creation from private investments, and improved corporate governance. There is a risk of value destruction if Carronade's short-term agenda is adopted, potentially leading to loss of tax benefits and restricted liquidity.
• Management/Employees: Impacted by restructured compensation (shift to restricted stock), internalization of the management structure, and leadership succession (new CEO, Chairman).
• Portfolio Companies: Expected to benefit from Cannae's active management, operational improvements, and deep industry expertise provided by the Board.
• Creditors: Benefited from the commitment to repay a $101 million margin loan from Dun & Bradstreet sale proceeds.

Next Steps

• Shareholders are urged to vote on the WHITE proxy card FOR ONLY Erika Meinhardt, Barry B. Moullet, James B. Stallings, Jr., and Frank P. Willey at the 2025 Annual Meeting.
• Continue to execute the strategic plan to build durable, long-term shareholder value.
• Continue to identify future public asset disposals.
• Continue to opportunistically invest in attractive companies with positive cash flow.
• Continue to deliver a strong quarterly dividend and accelerate share repurchases.
• The Board is to be fully declassified by 2028, contingent on shareholder approval.

Key Dates

Recommendation

The filing presents a strong case for Cannae's current strategy, highlighting significant achievements in portfolio transformation, capital return, cost reduction, and governance improvements. The company has demonstrated tangible results, such as a 21% reduction in NAV discount and substantial share repurchases. However, the ongoing proxy contest introduces uncertainty and potential disruption. While the current management's plan appears sound and is delivering, the outcome of the shareholder vote and the potential for a change in board composition or strategy could impact future performance. A "hold" recommendation reflects the positive trajectory under current management but acknowledges the near-term risk and uncertainty associated with the activist campaign. Investors should monitor the outcome of the annual meeting closely.

Keywords

Proxy Contest, Shareholder Meeting, Board Nominees, Strategic Transformation, Private Investments, Capital Return, Share Repurchases, Dividends, Corporate Governance, NAV Discount, Management Fees, SEC Filing, Cannae Holdings, Carronade Capital, Investment Strategy, Portfolio Management