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UPDATE 2-Last-minute Disney policy change averts proxy access vote
March 19, 2014 / 12:35 AM / in 4 years

UPDATE 2-Last-minute Disney policy change averts proxy access vote

(Adds reaction of shareholders)

By Lisa Richwine

PORTLAND, Oregon, March 18 (Reuters) - Walt Disney Co appeased large shareholders who demanded more say in the naming of directors and splitting of the chairman and chief executive officer jobs in the future, persuading them to withdraw a proposal hours before it was to have gone to a vote on Tuesday.

A last-minute change in board guidelines specified that the chairman should be an independent director unless the company justifies it in writing. Chief Executive Officer Bob Iger has also served as chairman since 2012.

The shareholder deal averted a contest, and investors re-elected Iger and nine other directors at Disney’s annual shareholder meeting on Tuesday.

Disney shareholders had originally been scheduled to vote on a “proxy access” resolution that asked the company to allow large shareholders to nominate board members. The resolution’s proponents agreed to withdraw their proposal, according to a regulatory filing from Disney.

Iger’s dual appointment as chairman and chief executive has drawn criticism from some investors and driven support for the proposal. A similar resolution won the support of 40 percent of votes a year ago.

The latest amendment to the guidelines allows for exceptions to the rule, provided the company justifies in writing annually why that would be in the best interests of shareholders.

In such cases, Disney said it will also designate one independent director its lead director.

“The chairman of the board shall in the normal course be an independent director unless the board concludes that, in the light of the circumstances then present when any such decision is made, the best interests of shareholders would be otherwise better served,” Disney said in its early morning filing.

A Disney spokesman said on Tuesday that the amendment clarified a standard that the company’s board had previously committed to.

At the shareholder meeting, all current board members were re-elected with at least 92 percent of the vote. They include Twitter Inc Co-Founder Jack Dorsey, who joined the board in December, and Facebook Chief Operating Officer Sheryl Sandberg. Iger won the support of 99 percent of ballots cast.

The results are preliminary based on votes cast ahead of the meeting.

ISSUES WITH PAY?

Large shareholders said on Tuesday they would continue to talk to Disney about board transparency and compensation.

The California State Teachers’ Retirement System, known as CalSTRS, withdrew support for proxy access proposal after Disney amended guidelines. CalSTRS spokesman Ricardo Duran said this showed the company was working to address many of the concerns that prompted that resolution in the first place.

But CalSTRS “continues to have issues with the magnitude and structure of the current pay program for the CEO, despite the outstanding performance achieved during Mr. Iger’s tenure,” he added. Those issues included an “emphasis on short-term performance with large cash payments.”

Another investor, the Connecticut Retirement Plans and Trust Funds, said it reserved the right to re-file the proposal “if the engagement between the co-filers and Disney does not continue to demonstrate transparency on board leadership issues.”

Still, shareholders on Tuesday approved the compensation packages for Iger and other executives in a non-binding vote, with support coming from 80 percent of ballots cast.

CalSTRS voted against that resolution, Duran said.

Disney previously slashed Iger’s compensation for fiscal 2013 for the year that ended in October by some 15 percent. His bonus was reduced by $3 million because Disney did not outperform his targets by the same “extraordinary amount” as in the previous year, the company said at the time.

Disney’s shares surged 42 percent in the past year to $81.99 after strong results from cable TV sports juggernaut ESPN, theme parks and the company’s movie studio, which is riding a $1 billion hit with Oscar-winning animated film “Frozen.”

Iger told shareholders that “Frozen” is now poised to become the highest-grossing animated film of all time, surpassing “Toy Story 3” from Disney’s Pixar unit.

He also revealed that the new “Star Wars” movie set for release in December 2015 will be set 30 years after 1983 film “Episode VI: Return of the Jedi.”

In addition, Disney’s movie studio is planning sequels to Pixar’s “Cars” and “The Incredibles” movies, Iger said. (Reporting by Lisa Richwine and San Francisco Newsroom; Editing by Cynthia Osterman)

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