Proxy adviser Glass Lewis & Co. is opposing five nominees to the board of Walt Disney Co. (DIS), citing deficient links between performance and executive pay, and one director’s ties to a failed lender.
Four of the nominees served on the TV, theme-park and film company’s compensation committee, Glass Lewis said in a report. The fifth nominee served on the board of a bank that was seized by regulators in 2008, resulting in losses for the investors.
The firm joins proxy adviser Institutional Shareholder Services Inc. and Connecticut Treasurer Denise L. Nappier in opposing Disney directors up for a vote at the March 13 annual meeting in Kansas City, Missouri. Glass Lewis opposes half the nominees. A third proxy adviser, Egan-Jones Proxy Services, supports the company’s nominees and other issues on the ballot.
Much of the opposition relates to Disney’s decision last year to give Chief Executive Officer Robert Iger the additional title of chairman at the annual meeting. The company hasn’t had one executive in both positions since then-chief executive Michael Eisner gave up the chairman title in 2004 under pressure from shareholder groups that said an independent chairman would lead to better shareholder stewardship.
Disney, based in Burbank, California, rose 0.5 percent to $42.24 at the close in New York. The stock has gained 13 percent this year.
Glass Lewis prefers companies split the jobs of chairman and chief executive or have a lead director who isn’t an executive of the company, the firm said in the Feb. 23 report.
While Disney said it will appoint an independent lead director, the company doesn’t appear to have done so and Glass Lewis said it is monitoring the issue.
The decision to combine the positions was part of a transition plan that was carefully thought out by the board, retiring Chairman John Pepper said in a statement March 7.
“Nine out of the ten directors will be independent, including an independent lead director with duties and responsibilities that exceed in scope those recommended by governance advisers,” Pepper said.
Of the 100 biggest Standard & Poor’s companies, 68 percent have a joint chairman and CEO, Pepper said. In a filing last week, the company cited better long-term stock performance than peers such as News Corp. (NWSA), Time Warner Inc. (TWX), Comcast Corp. (CMCSA), CBS Corp. (CBS) and Viacom Inc.
“The Board rightfully considered Mr. Iger’s performance over the course of his tenure when viewed in relation to the industry peers against which both he and his compensation package are most fairly measured,” Disney said in the filing. “On that measure Mr. Iger’s compensation is fully warranted.”
In backing the nominees, Egan Jones said in its March 6 report the audit, compensation and governance-nominating committees were composed of independent, outside directors.
According to Glass Lewis, Disney overall paid more than its peers, while performing moderately worse. The adviser based its analysis on 29 similarly sized companies, including four in consumer products and six in movies and entertainment.
Glass Lewis also cited the role of Orin Smith on the audit and governance committee of Washington Mutual when that lender was seized by regulators in September 2008.
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