Shareholders of the Walt Disney Co. re-elected the company's directors and rejected shareholder proposals designed to split the roles of CEO and chairman.
The vote came despite concern about corporate governance and executive compensation raised by large shareholders, including some state pension funds. A company proposal seeking approval of the company's executive performance plan passed with 88% of the vote, but an advisory vote on overall executive compensation passed with just 56% of the vote.
Chairman and CEO Bob Iger called the meeting to order Wednesday morning in Phoenix, noting that the company's stock had hit a new high on Tuesday and was up higher in early trading. That announcement drew a round of applause.
Iger was re-elected to the board with more than 98% of the vote. Other directors received between 86% and 99% of the ballots cast.
During the meeting, a representative of the Connecticut Retirement Plan and Trust Fund argued that having an independent chairman and CEO produces and enhances value in the long term and that companies with separate chairmen and CEOs outperform those that combine the roles. Those executive also get paid significantly more, the representative added.
The representative of another pension funded added that having separate chairmen and CEOs provide important safeguards. Disney had a bad experience when Michael Eisner was chairman and CEO, he added, noting that that "those who forget history are doomed to repeat it."
Company lead director Orin Smith explained that while Disney's guidelines call for an independent chairman and CEO, in this case the decision was made "in the best interest of shareholders." He called Iger and "exceptional CEO" and that his contract was set to expire in 2013 when the board decided to ask him to become chairman. Under the new arrangement, he would be with the company through 2015 and would be able to provide an orderly transition to a new CEO. "We believe that's an exceptional circumstance," said Smith, a former Starbucks CEO.
