Disney‘s annual meeting on March 6 could become interesting after two leading proxy advisory firms — Institutional Shareholder Services and Glass Lewis — recommended that shareholders defy the board on three resolutions up for a vote. The companies support a resolution that would stop Bob Iger from serving both as the board’s chairman and the company’s CEO. The firms also support a proposal that would make it easier for shareholders to nominate directors, and want investors — in an advisory vote — to oppose the company’s executive compensation plan. ISS notes that Iger’s $40.2M package for the fiscal year that ended in September, a 20.3% raise, was based in part on comparisons with CEO pay at other media companies, including some family controlled ones such as News Corp and Viacom. They “tend to be outliers compared to widely-held public companies” and, with their family ties, probably wouldn’t try to recruit Iger. Disney also “does not provide target goals for the various financial measures” used to compute Iger’s pay. With those concerns, having Iger also serve as chairman might lead to questions about the board’s “willingness and ability to provide independent oversight over management.”
Glass Lewis shares the concerns as it rates the overall structure of Disney’s compensation as “poor.” The wide disparity between Iger’s pay and other top execs “may indicate that the CEO retains excessive power or authority, thus making any future transitions following his departure more difficult and inefficient.” And giving him the two top jobs “concentrates too much oversight in a single person and inhibits the independent oversight intended to be provided by the board on behalf of shareholders.”
Disney counters that Iger deserves much of the credit for the company’s strong stock performance. “The facts are irrefutable,” it says. “Disney delivered record net income, revenue and earnings per share and exceptional shareholder returns in fiscal 2012. Total shareholder return for the year was 76.3%, compared to 30.2% for the S&P 500.” Calling Disney’s performance during the CEO’s tenure “nothing short of spectacular,” the company adds that shareholders saw a total return of 139% which “dramatically exceeds the S&P 500’s return of 36%, and 15% growth in diluted EPS on a compounded basis. Disney has delivered results that speak for themselves.”
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