The change appears to have appeased shareholders who are still seething over Disney’s decision to make Bob Iger both CEO and Chairman — and scratches a potentially embarrassing vote today over a proposal that could have made the process of selecting board members slightly more democratic. The company says in an SEC filing this morning that it agreed to change its Corporate Governance Guidelines so that, in the future, the chairman will be an independent director unless the board decides it would be best to give one person both jobs. If it does, then directors have to justify it in writing every year and designate an independent board member to be the Lead Director. In return for the change, the California State Teachers Retirement System (CalSTRS) and others withdrew a proposal that would have required Disney to list in its proxy candidates for as many as a fifth of the board seats nominated by firms that own 3% or more of the shares for at least three years. Vanguard Group, State Street Global Advisors, BlackRock, MFS Investment Management, and the Laurene Powell Jobs Trust (which controls the shares formerly owned by Steve Jobs) are the only shareholders that would have qualified. Advisory firms Institutional Shareholder Services and Glass Lewis, and several major pension funds, supported the resolution similar to one endorsed last year by owners of about 40% of Disney’s shares.
Supporters said that the change would “enhance [Disney's] accountability to shareholders.” Many believe that the concentrated power in a single CEO-Chairman has made it easier for the board to approve outsized compensation for top execs: Iger made $34.3M last year and $40.2M the year before. Disney urged a “no” vote saying that the board already serves investors’ long term interests and a change would lead to “disruption, expense, distraction, politicization of director elections.”