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Disney shareholders vote against splitting CEO, chairman positions

March 06, 2013|By Daniel Miller
  • Walt Disney Co. Chairman and CEO Robert Iger won't be losing one of his titles anytime soon.
Walt Disney Co. Chairman and CEO Robert Iger won't be losing one of… (Kevin Winter / Getty Images )

Shareholders have voted down two proposals brought forward at the Walt Disney Co. annual meeting that sought to change how the largest entertainment company in the world is governed.

One proposal called for the future split of the chief executive and chairman positions, which are both currently held by Robert Iger. At the meeting, held in Phoenix on Wednesday morning, the Burbank-based company said that only 35.3% of shareholders who cast non-binding votes in advance of the meeting approved the split.

The other defeated proposal centered on giving challenger board candidates an easier path to election by allowing their names to appear on the company's ballots. The proposal received approval from only 39.8% of shareholders in another non-binding vote.

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The Disney board, in the company's Jan. 18 proxy statement, recommended voting against both proposals.

Shares of Disney closed at $56.48 on Tuesday -- an all-time high. The stock closed slightly down on Wednesday at $56.36.

Also addressed at the meeting was the issue of executive pay. A non-binding vote on pay received approval from 57.6% of voting shareholders. According to the proxy statement, Iger's total compensation in the 2012 fiscal year was $40.23 million. 

The plan to split the chief executive and chairman positions was put forward by the Connecticut Retirement Plans and Trust Funds, which said in a proposal included in the proxy that "leadership of the board should be separate from leadership of management." The California State Teachers’ Retirement System and the California Public Employees’ Retirement System also supported separation of the positions.

"The board has weakened shareholder confidence and trust in its ability to provide effective oversight of management," said a representative of the Connecticut Retirement Plans and Trust Funds.

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The issue of an independent chairman stretches back to 2004, when Disney shareholders cast a no-confidence vote in Michael Eisner, then the company's chairman and chief executive. After the vote, the Disney board separated the roles. 

But, in fall 2011, the company's board announced it would make Iger, then chief executive, the new chairman after the 2012 retirement of then-chair John Pepper. Iger's contract calls for him to retain the chairman position until June 2016. (He is slated to remain chief executive until March 2015.) Disney has previously told shareholders that the decision to combine the roles was done in part because it was in the best interest of its succession plan.

In explaining the combining of the positions, Disney lead director Orin Smith said the "decision was made in the best interest of our shareholders.” Smith cited the financial success of Disney under Iger; the company has touted its total return to shareholders of 76.3% for the 2012 fiscal year, which compares favorably to the 30.2% return for the S&P 500 index.

The proposal on proxy access for people nominated to the board of directors was put forward by Legal & General Investment Management on behalf of its client Hermes Equity Ownership Services, a London-based investment advisory firm.  The group said in a statement included in the proxy that its plan would allow shareholders to "more easily promote independent candidates for the board" in part by including shareholder-nominated candidates in proxy materials.

A Hermes representative said the idea behind the proposal was to inject "some new blood onto the board." 

Disney's response in the proxy said that the proposal risked "disrupting the board," particularly if a shareholder elected to the board represented a "narrow interest."

Shareholders also reelected all 10 members of the Disney board of directors and ratified the appointment of PricewaterhouseCoopers LLP as the company's independent accountant.

Iger also used the gathering to promote several Disney ventures, unveiling a new trailer for Walt Disney Studios' "Iron Man 3," which is slated for release May 3, and revealing the first rendering of the company's Shanghai Disney Resort.

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