Content

Despite Dissent, Disney Crowns Iger Chairman

3/19/2012 12:01 AM Eastern

The Walt Disney Co. CEO Robert Iger added
the title of chairman to his résumé without incident last
week, despite the objections of a vocal group of shareholders,
including proxy adviser Institutional Shareholder Services.

ISS had criticized Iger and the Disney
board for what it called a reversal
of its promise to keep the chairman
and CEO positions separate. Disney had
announced in October its intention to
name Iger — who will step down as CEO
in 2015 — as chairman at its March 13
annual meeting in Kansas City, Mo. The
advisory firm called for shareholders to
reject four members that serve on the
board’s Nominating and Governance
Committee: Facebook chief operating
officer Sheryl Sandberg; JLabs CEO Judith
Estrin; Potbelly Sandwich Works
CEO Aylwin Lewis; and private-equity
investor Robert Matschullat.

SOUGHT SEPARATION

ISS was joined by a few larger shareholders, including
Connecticut state treasurer Denise Nappier, trustee of the
Connecticut Retirement Plans and Trust Funds, which
owns about 642,000 Disney shares. In a statement, Nappier
called Disney’s decision to combine the chairman and CEO
role a “regressive policy that could impair the board’s role to
oversee executive management on behalf of shareholders.”

While ISS and Connecticut asked shareholders to reject
four members of Disney’s board of directors slate, other larger
shareholders, like the California Public Employees’ Retirement
System (CalPERS), with 5.7 million Disney shares, voiced
their support of the board before the meeting.

Shareholders largely ignored the controversy — the question-
and-answer session at the annual meeting in Kansas
City was without incident. During the Q&A for items subject
to vote — usually a forum for the company’s opponents — no
one stepped to the microphone, which
visibly surprised outgoing Disney chairman
John Pepper.

“Frankly, I appreciate
that,”
Pepper said at the
meeting.

In the end, Disney
board members
received a
strong showing of
support. The entire
slate was approved
with more
than 73% of shareholders
voting in
the affirmative
for all 10 directors.
It was a far
cry from Disney’s
2004 annual meeting at which a group of
shareholders, led by Disney family member
and former company executive Roy
Disney, had called for the ouster of then
chairman and CEO Michael Eisner.

Eisner relinquished the title of chairman
at that meeting, and the next year
stepped down as CEO. He was replaced
by Iger, then the chief operating officer.

Eisner had come under fire for his
brash management style, which at the
time many shareholders thought was
jeopardizing Disney’s relationship with animation giant Pixar
and its chairman Steve Jobs, and a declining stock price.
When Iger stepped in as CEO in October 2005, he quickly established
himself as a calming influence — Disney agreed to
buy Pixar in 2006 for $7.4 billion, a deal that
made Jobs the largest Disney shareholder
— and has helped grow the company into
a media and entertainment powerhouse.

NO EISNER REPEAT

“This was 180 degrees different,” Miller
Tabak media analyst said David Joyce of
the March 13 annual meeting. He noted
that Iger has taken a middle-of the-road
approach to managing Disney.

“Iger has decentralized decisionmaking,
which can make for happier, more
productive executives and teams,” Joyce
said. “And working with Pixar and Jobs as
the initial feather in his cap when he got
the job painted a positive, forward-thinking
aura that still lasts today over his leadership
of Disney.”

Iger also won the support of the board. In
Securities and Exchange Commission filings
leading up to the meeting, the company
noted that Iger’s performance has been
among the best in the media industry.

According to Disney, $100 invested on
Oct. 1, 2005 when Iger became CEO was
worth $171 on Dec. 31, 2011. That compares
to $117 for an investment in the S&P
500 index and no more than $136 in any
four of Disney’s top media peers — CBS,
News Corp., Time Warner Inc., and Comcast.

September
October