CalPERS joins opposition to dual chairman-CEO role at Walt Disney

Long-standing battle over roles at world’s biggest entertainment company subject to non-binding vote in March

CalPERS, the largest pension fund in the US, has joined major proxy advisers in calling on Walt Disney to split the roles of chairman and CEO after the resignation of Robert Iger, who currently holds both jobs, saying a split would improve oversight of management.

Shareholders of Walt Disney, which is scheduled to hold its annual shareholder meeting on March 6, are to hold a non-binding vote on whether to split the roles, a year after Iger was named chairman, adding to his role of CEO.

‘CalPERS believes if the chairman were not the CEO the board might be able to exercise stronger oversight of management,’ the pension fund, which owns more than 5 mn Walt Disney shares, says in recommending a vote in favor of the proposed separation.

The statement comes after major proxy advisers Glass Lewis and ISS both recommended shareholders support the separation, which was proposed by Connecticut Retirement Plans & Trust Funds, and recommended a vote against the company’s executive compensation plan. CalSTRS came out in favor of the split in mid-February.

Controversy over the dual role of chairman and chief executive at Walt Disney stretches back almost 10 years to Michael Eisner’s time at the helm of the entertainment company. In 2004 shareholders voted to separate the two positions but they were joined again last year when Iger, already the chief executive, became chairman as well.

‘Here we go again, sliding back into a governance structure that has already proved detrimental to the company’s long-term growth and shareholders’ interests,’ CalSTRS’ director of corporate governance Anne Sheehan says in a press statement. ‘We’ve been through this fight before, in 2004-2005, which resulted in the ouster of then-CEO Michael Eisner and a shareholder revolt that led to the separation of the board chair and CEO positions.’

CalSTRS says the dual role has led to the creation of ‘an entrenched and insular board that lacks independence from the CEO’ that has led to a ‘poor governance structure and compensation plans.’

Walt Disney defended the dual role earlier this week in a regulatory filing to the SEC, saying: ‘Disney has delivered results that speak for themselves. The facts are irrefutable: Disney delivered record net income, revenue and EPS, and exceptional shareholder returns in fiscal 2012.

Disney’s performance during Iger’s tenure has been nothing short of spectacular, with total shareholder return of 139 percent that dramatically exceeds the S&P 500’s return of 36 percent, and 15 percent growth in diluted EPS on a compounded basis.’


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