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Shareholders reject Disney pay proposals

'Golden coffin' is still open. Attempt to give investors more input

March 11, 2009|Dawn C. Chmielewski

OAKLAND — Walt Disney Co. investors, meeting at the company's annual shareholder meeting, rejected a pair of proposals that would have buried so-called golden coffin benefits for senior executives and given shareholders a say in executive compensation.

Scott Adams of the American Federation of State, County and Municipal Employees Pension Plan Fund handed Disney board members a symbolic golden nail and urged them to hammer it into the company's golden coffin benefits, which provide millions in posthumous payments to the families of top executives. Under Disney's benefit plan, Chief Executive Bob Iger's family would stand to receive $4.5 million in the event of his death.

Disney Chairman John E. Pepper said such benefits were part of a negotiated compensation package for senior officers, to ensure security for their families. But he added that these payments have become a "much less important" element of the executive's overall compensation, and the company is no longer extending this benefit to new executives.

The measure failed with just 27% of shareholder votes.

Another shareholder proposal would have given investors an advisory vote on the pay of Iger and other top Disney executives.

"Executive pay has spiraled out of control, and it needs the voice of shareholders to bring our board and compensation experts back to earth," said Lorenzo Ersland, finance director for the Tides Foundation, speaking on behalf of the group of 75 investors backing the "Say on pay" initiative.

Pepper told attendees the board was "very conscious" of the issues surrounding executive pay. He said the compensation committee based its decisions on how well an executive meets performance goals and whether the company hits financial targets.

"A simple up-or-down vote on the package will not reveal what element of that package might be of concern," Pepper said. "At most, the vote invites dialogue. We already have dialogue underway."

The Say on pay measure also went down to defeat, receiving backing from 39% of shareholders.

Investors also returned all of Disney's directors to another one-year term. However, one board member was a particular focus of interest: Apple Inc. Chief Executive Steve Jobs, who did not attend Tuesday's annual meeting.

Jobs, who is Disney's single largest shareholder, has taken a six-month leave from Apple to deal with health issues.

One Disney shareholder, who did not identify himself, asked the board if it had a plan, should Jobs not be able to perform his duties. He also asked if the company had taken steps to protect itself from a hostile investor should Jobs' 138 million shares of stock become available on the open market. Jobs acquired his 7.5% stake in Disney when the entertainment giant acquired Pixar Animation in 2006.

"We have not thought at all of the contingency of Steve not being on this board," Pepper said. "Our only thoughts are with him and his rapid recovery." Iger added that Disney similarly had not considered what would happen should the bloc of shares no longer be under the control of Jobs and his family.


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