Annual shareholder meetings at The Walt Disney Company had been pretty tame affairs since 2004, when a shareholder revolt sought to oust CEO Michael Eisner and set the stage for him to resign under pressure a year and a half later. Now the Magical Kingdom is facing another potential revolt at the March 13th annual meeting.
Institutional shareholder Services (ISS), which advises many major investors on upcoming shareholder votes, has told clients they should vote against re-election of the board members who are members of the governance and nominating committee. ISS objects to the decision to have Iger serve as Chairman as well as CEO from this month’s meeting until March 2015 when a new CEO should be in place so Iger can retire completely in 2016. ISS also said Iger’s compensation package was excessive.
The Disney board has sent shareholders a long commentary disagreeing with ISS. And it has followed up with this short form:
“Disney fundamentally disagrees with certain of ISS’s recommendations, which are based on both flawed premises and methodology. The Company’s Board of Directors adheres to a rigorous performance test for compensation, and the Company’s tremendous performance under Bob Iger is evident. Disney had record financial performance in Fiscal Year 2011 and its total shareholder return is more than four times greater than that of the S&P 500 during Mr. Iger’s more than six years of leadership. After careful and considered deliberation, the Board took action to secure Mr. Iger’s leadership through his expected retirement in 2016 to provide for an effective, seamless succession and management transition and continuity of the Company’s proven strategy. In addition, the board will appoint an independent lead director with duties and responsibilities that, ironically, exceed in scope those recommended by ISS.”
RBR-TVBR observation: Since Iger’s dual role is for a set time period as part of a transition, the objection by ISS seems to be overblown. With John Pepper exiting the chairmanship by choice this month, the alternative would have been to find a chairman to serve three years until Iger’s successor as CEO is selected so he can move to the chair. It is certainly not unusual to have a single person as corporate CEO and board chairman, as much as ISS objects to the practice.