UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 21)
Sculptor Capital Management, Inc.
(Name of Issuer)
Class A Shares
(Title of Class of Securities)
811246107
(CUSIP Number)
Daniel S. Och
c/o Willoughby Capital Holdings, LLC
667 Madison Avenue
Floor 23
New York, NY 10065
(212) 655-2678
(Name, address and telephone number of person authorized to receive notices and communications)
November 3, 2022
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. ☐
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.
| * | The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. |
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
| CUSIP No. 811246107 | SCHEDULE 13D | Page 2 of 4 |
| 1 | NAME OF REPORTING PERSON OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Daniel S. Och | |||||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☐ (b) ☒
| |||||
| 3 | SEC USE ONLY
| |||||
| 4 | SOURCE OF FUNDS
OO | |||||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
☐ | |||||
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION
United States | |||||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
|
7 | SOLE VOTING POWER
203,6661 | ||||
| 8 | SHARED VOTING POWER
0 | |||||
| 9 | SOLE DISPOSITIVE POWER
203,6661 | |||||
| 10 | SHARED DISPOSITIVE POWER
0 | |||||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
203,6661 | |||||
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
☐ | |||||
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.6%2 | |||||
| 14 | TYPE OF REPORTING PERSON
IN | |||||
| 1. | Represents 203,666 Class A Shares of the Issuer (as defined below) directly held by the Reporting Person. The Reporting Person also beneficially owns 7,620,988 Class B Shares of the Issuer. |
| 2. | Based on 24,856,260 outstanding Class A Shares as of August 1, 2022, as reported in the Issuer’s Form 10-Q for the period ended June 30, 2022 filed on August 5, 2022. The Reporting Person’s total combined voting power is 12.3%. |
| CUSIP No. 811246107 | SCHEDULE 13D | Page 3 of 4 |
ITEM 1 SECURITY AND ISSUER
This Amendment No. 21 on Schedule 13D (this “Schedule 13D”) relates to the Class A shares (the “Class A Shares”) of Sculptor Capital Management, Inc. (formerly known as Och-Ziff Capital Management Group LLC) (the “Issuer”), and amends and further supplements the Schedule 13D filed by the Reporting Person on November 29, 2007 (the “Initial Schedule 13D”), as amended by the Reporting Person by Amendment No. 1 to Schedule 13D filed on November 13, 2008, Amendment No. 2 to Schedule 13D filed on December 23, 2008, Amendment No. 3 to Schedule 13D filed on January 2, 2009, Amendment No. 4 to Schedule 13D filed on May 14, 2009, Amendment No. 5 to Schedule 13D filed on June 16, 2009, Amendment No. 6 to Schedule 13D filed on November 13, 2009, Amendment No. 7 to Schedule 13D filed on December 30, 2009, and Amendment No. 8 to Schedule 13D filed on March 18, 2010, Amendment No. 9 to Schedule 13D filed on May 25, 2010, Amendment No. 10 to Schedule 13D filed on December 13, 2011, Amendment No. 11 to Schedule 13D filed on May 24, 2012, Amendment No. 12 to Schedule 13D filed on November 19, 2012, Amendment No. 13 to Schedule 13D filed February 15, 2013, Amendment No. 14 to Schedule 13D filed on April 12, 2013, Amendment No. 15 to Schedule 13D filed on May 3, 2013, Amendment No. 16 to Schedule 13D filed on July 17, 2013, Amendment No. 17 to Schedule 13D filed on March 3, 2017, Amendment No. 18 to Schedule 13D filed on December 6, 2018, Amendment No. 19 to Schedule 13D filed on February 11, 2019, and Amendment No. 20 to Schedule 13D filed on October 4, 2022 (the Initial Schedule 13D as so amended, the “Statement”).
ITEM 4 PURPOSE OF TRANSACTION
Item 4 of the Statement is hereby amended by adding the following:
On November 3, 2022, the Reporting Person sent a letter (the “Letter”) to the Board of Directors of the Issuer (the “Board”). The Letter is attached hereto as Exhibit 26 and is incorporated herein by reference.
ITEM 7 MATERIAL TO BE FILED AS EXHIBITS
Item 7 of the Statement is hereby amended to add the following exhibit:
Exhibit 26 Letter, dated November 3, 2022, from the Reporting Person to the Board of Directors of the Issuer.
| CUSIP No. 811246107 | SCHEDULE 13D | Page 4 of 4 |
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated: November 3, 2022
| /s/ Daniel S. Och |
| Daniel S. Och |
Exhibit 26
Daniel S. Och
c/o Willoughby Capital Holdings, LLC
667 Madison Avenue
Floor 23
New York, New York 10065
November 3, 2022
Board of Directors
Sculptor Capital Management, Inc.
9 West 57th Street
39th Floor
New York, New York 10019
Dear Sculptor Board Members,
On August 24, 2022, I and a group of founding partners of Sculptor Capital Management, Inc. (the “Company”) brought a books-and-records action related to governance failures that, among other things, resulted in an exorbitant compensation package to the Company’s CEO, totaling $145.8 million in 2021 alone, despite sustained poor performance. That public lawsuit was only necessary because the Company had refused to honor our shareholder rights under Delaware law to provide us with information that would explain how the Board could come to this decision.
The Company wishes to cast the current situation as simply a personal grudge. I understand why—it allows the Company to obfuscate the real issues of entrenchment, governance failures, and poor performance. However, shareholders have been harmed by the decisions made by the Board. The record shows:
| • | In 2019, when I and the founding partners relinquished 35% of our ownership in the Company for the benefit of Mr. Levin and other senior managers, we were assured that the Board would be responsible for protecting the interests of all equity holders and overseeing Mr. Levin, which was central to our decision to voluntarily restructure the partnership. |
| • | Yet, during the two-year period since Mr. Levin was designated the incoming CEO, the Board allowed Mr. Levin to devote himself to entrenching his position at the Company, shaping the Board of Directors, and wielding that resulting leverage to extract ever escalating pay packages that are divorced from performance and cannot be supported by the Company’s core earning power. |
| • | The Board permitted the most recent compensation package to be approved by at least one conflicted director, COO Wayne Cohen, a subordinate of Mr. Levin, who Mr. Levin appointed to the Board. |
| • | Between June 2020 and November 2021, five members of the seven-person Board departed. Three of those directors had served on the Compensation Committee. Four left before the end of their terms. |
| • | ISS has consistently criticized both the governance and compensation schemes of the Company, expressing “high” concern and giving it the worst possible score in the compensation category. |
| • | The Company ceased monthly performance reporting and its securities filings are opaque, delayed, and lacking critical disclosures, particularly on compensation details. |
These are the issues that we, and the other public shareholders, are questioning. Nothing in our books-and-records action put at issue my dealings with Mr. Levin many years ago. Yet because the Company could not objectively explain the profound disconnect between abysmal performance and exorbitant CEO pay, the Company chose to interject old history into the litigation—specifically by claiming, falsely, that my decision not to elevate Mr. Levin as CEO was because of animus arising out of past dealings with respect to a government investigation.
In light of those misrepresentations, we were obliged to correct the record in court: In the fall of 2017, I passed over Mr. Levin for several reasons, including my belief that Mr. Levin would place his own interests ahead of the Company and because of a personal issue in Mr. Levin’s past that had become particularly relevant given society’s heightened focus on these issues at the time. This statement is truthful and reflects my views in 2017 and since, as confirmed in the communications that I had with the Board at the time.
I am also obliged to correct the record created by the Board’s statement made earlier this week, suggesting that I knew that Harvard had “exonerated” Mr. Levin. I did not. Not only have I never seen any report from Harvard, but based on the information presented to me in 2017, I had concerns about the matter, which I made clear to the Board at the time and in subsequent meetings when the issue arose. These facts are reflected in the Company’s records.
I write today because I believe that time is of the essence. The Company’s governance issues and structural performance deficit threaten its core business. Below are nine-month, three-year and five-year performance data through September 30, 2022 for the multi-strategy fund and the credit fund. This period coincides with Mr. Levin’s tenure as CIO.
| Net Annualized Returns |
9-Month | Three-Year | Five-Year | |||||||||
| Multi-Strategy Fund |
(13.9 | %) | 4.6 | % | 4.4 | % | ||||||
| Credit Fund |
(3.4 | %) | 3.6 | % | 4.5 | % | ||||||
In 2021, the multi-strategy fund’s return was in the bottom quartile. In 2022, performance has further deteriorated—down 13.9% as of the end of the third quarter, one of the lowest returns of its multi-strategy peers.
I believe that it is imperative that the Company stop trying to create a false narrative of animus and show investors that there is a better path forward. In its response to my prior letter, the Board said that it is open to alternatives. As such, I urge the Board to publicly announce that it will pursue a broad range of strategic alternatives. If the Board is serious about its legal obligations, its openness to alternatives should be transparent and carried out by a committee of truly independent directors focused solely on what is best for shareholders. With the guidance of independent counsel and independent financial advisors, that committee should encourage a broad process that does not favor existing management over third parties, and whose sole purpose is to maximize shareholder value.
With a fresh approach to management and leadership, the Company can and should do better.
Sincerely,
/s/ Daniel S. Och
cc: Andrew J. Levander, Dechert LLP
Kenneth E. Young, Dechert LLP
David M. Levine, Sculptor Capital Management, Inc.