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Mar 06, 2013

Disney shareholders reject call to split chairman and CEO roles

Proposal to allow holders of at least 3 percent stock to place board candidates on ballot also rejected

Shareholders of Walt Disney have voted against the advice of proxy advisers and pension funds and rejected proposals that would split the roles of chairman and CEO at the entertainment group and allow owners of more than 3 percent of the company’s stock to place proposed board members on the ballot.

Only just over a third (35 percent) of shareholders voted in favor of the proposal that would have split the two roles after the departure of Robert Iger, the chief executive who assumed the role of chairman as well last year. Less than 40 percent voted in favor of allowing challenger board candidates to appear on the ballot.  

‘Shareholders agreed with the board in rejecting two shareholder proposals regarding proxy access and the future separation of the chairman and CEO roles,’ Walt Disney says in a written statement to investors, without elaborating.

The vote rejects a call from proxy advisers ISS and Glass Lewis and pension funds CalPERS and CalSTRS to support the proposal by the Connecticut Retirement Plans & Trust Funds to split the roles when Iger resigns as planned in March 2015.

Shareholders also approved Walt Disney’s long-term executive compensation plan despite criticism from CalSTRS and others, and approved all 10 board members backed by the company.

Ahead of the March 6 vote, Walt Disney defended the dual role by pointing to the company’s financial success under Iger, saying the CEO and chairman has helped give shareholders a return of 139 percent during his reign while the S&P 500 rose only 36 percent over the same period.

‘Disney’s performance during Iger’s tenure has been nothing short of spectacular,’ the company says in a regulatory filing to the SEC. ‘The facts are irrefutable: Disney delivered record net income, revenue and EPS, and exceptional shareholder returns in fiscal 2012.’

Criticism of Iger’s dual role at Walt Disney followed controversy that dates back to 2004, when Michael Eisner, who held both roles, was ousted in a shareholder revolt led by Roy Disney, the nephew of the company’s founder; shareholders approved a separate chairman that same year. Iger was named chairman when he signed a new contract last year. He plans to resign as CEO in 2015 but will continue to hold the role of chairman until mid-2016.

Opponents of the dual role say the split would improve oversight at Walt Disney and work in the long-term interests of the company and its shareholders.

‘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, said in recommending a vote in favor of the proposed separation.