Disney, Activist Shareholders Reach Compromise

Walt Disney Co. reached a compromise with activist shareholders over certain corporate governance guidelines, avoiding a vote on the "proxy access" matter at its annual general meeting Tuesday.

Disney agreed, under normal circumstances, to separate the chairman and chief executive positions. When the board determines that the CEO and chairman should be the same person the board will provide a written statement in its proxy materials explaining why. In addition, should this situation arise, Disney will designate an independent director to be lead director. Currently, Orin Smith is Disney's lead director and Roger Iger holds both the CEO and chairman posts.

In exchange, supporters of the proposal, which would made it easier for shareholders to nominate independent directors, agreed to withdraw it, according to a regulatory filing. It would have allowed nominators who own at least 3% of Disney stock for at least three years to submit nominations.

Shareholder-advisory firms Institutional Shareholder Services and Glass, Lewis & Co. had both supported the proposal, while Disney's board opposed it. A similar proposal last year received 40% support from voting shareholders.

Some activist shareholders have pushed proxy access for years. Official company ballots currently list only management's choices, forcing investors who hope to shake up company boards to wage costly campaigns and foot the bill for distributing their own ballots.

In early 2012, Hewlett-Packard Co. agreed to give its stockholders the chance to approve proxy access through a bylaw vote at its 2013 annual meeting after an activist investor agreed to withdraw a nonbinding proposal for the 2012 meeting. The bylaw passed, as expected.

Shareholders of Nabors Industries Ltd. approved a nonbinding proxy access resolution in 2012, marking the first time such a proposal had passed at a major company. Though the same resolution again won majority support last year, Nabors has yet to embrace proxy access. Proponents have resubmitted the resolution for this year's annual meeting.

As the annual meeting got underway Tuesday the company said preliminary results from its "say on pay" vote showed that 80% of shareholders supported the company's executive pay practices, up from 58% last year. ISS this year recommended supporting the company, in a change from its recommendation last last year. Glass Lewis again recommended a "no" vote.

Write to Ben Fritz at [e-mail] and Joann S. Lublin at [e-mail]

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