Disney shareholders back board, reject CEO/chair split

Wed Mar 6, 2013 4:04pm EST

The signage at the main gate of The Walt Disney Co. is pictured in Burbank, California, May 7, 2012. REUTERS/Fred Prouser

The signage at the main gate of The Walt Disney Co. is pictured in Burbank, California, May 7, 2012.

Credit: Reuters/Fred Prouser

(Reuters) - Walt Disney Co shareholders on Wednesday re-elected the company's board, including Chairman and Chief Executive Bob Iger, and rejected an investor proposal to separate the roles of chairman and CEO in 2016, when Iger plans to leave the company.

Shareholders of the media and theme-park company defeated the proposal from Connecticut State Treasurer Denise Nappier, a Disney investor through the state's employee retirement funds, to split the CEO and chairman jobs.

About 35.3 percent of ballots cast supported the plan, according to figures reported at the company's annual shareholder meeting in Phoenix. The results were preliminary, based on votes submitted before the meeting.

Iger, who has served as Disney's CEO since 2005, won re-election to the board with support of 98.3 percent of votes cast. The nine other board members received at least 86.6 percent favorable votes.

At the start of the meeting, Iger touted Disney's recent financial performance. "Yesterday our stock price hit an all-time high. Market cap hit a record $102 billion," he said.

The board gave Iger, 62, the added title of chairman at the 2012 annual meeting, where he was elected by shareholders. Also at that meeting, the board named former Starbucks Corp CEO Orin Smith as Disney's independent lead director at meeting.

For some shareholders, Iger's dual roles recalled the turbulence surrounding former CEO Michael Eisner, stripped of his chairmanship in 2004 following a campaign by Walt Disney's nephew, Roy Disney, to drive him from the company.

The California State Teachers' Retirement System (CalSTRS) and New York City Comptroller John Liu, who oversees the city's pension funds, supported the Connecticut resolution that urged the board to split the jobs except under "extraordinary circumstances," when the posts could be held jointly for no more than six months.

"A large, highly integrated organization like Disney simply does not work most effectively when the CEO manages the board responsible for overseeing him and evaluating his performance," said Suzanne Hopgood, who spoke at the meeting on behalf of Connecticut Treasurer Nappier.

Proxy advisers ISS and Glass, Lewis & Co also recommended ahead of the meeting that shareholders vote for separation of the roles, and against the pay for Iger and other executives.

In a regulatory filing in January, Disney urged shareholders to vote against the proposal to split the chairman and CEO jobs, pointing to the company's financial record under Iger.

Disney has recorded a total shareholder return of 139 percent during Iger's tenure, far above the 36 percent return for the S&P 500 during the same time, the company said.

At Wednesday's meeting, board member Smith said the decision to offer Iger the chairman's job was made "in the best interest of shareholders."

Smith said: "It was clear that Disney had an exceptional CEO," and the chairman's job will keep him at the company for an additional 15 months."

Shareholders approved the compensation packages for Iger and other executives in a non-binding vote, with 57.6 percent approval among the ballots cast. CalSTRS criticized the structure of long-term incentives ahead of the meeting and had urged votes against it.

Iger received $40.2 million in total compensation last year, according to regulatory filings.

Disney shareholders also rejected a proposal from European institutional investor Legal & General Investment Management that the company allow shareholders holding 3 percent or more of its shares to place candidates on the ballot alongside board-nominated candidates. About 39.8 percent of voters supported the measure.

Shares of Disney slipped 0.3 percent to $56.34 in afternoon trading on the New York Stock Exchange.

(Reporting by Lisa Richwine; Editing by Ronald Grover, Phil Berlowitz, Bernadette Baum and David Gregorio)

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