At the Walt Disney Companys annual meeting of shareholders today, shareholders approved Disneys controversial executive compensation plan and voted to reelect Disneys slate of directors, despite negative recommendations by the ISS. ISS had recommended against voting for the members of Disneys Governance and Nominating Committee because of the decision to appoint its Chief Executive Officer, Bob Iger, as Chairman of the Board at the annual meeting, thereby reversing a commitment to independent board leadership without conducting outreach to shareholders beforehand. Disney had not combined the roles of CEO and Chairman since 2004. ISS also recommended against Disneys say-on-pay vote.
Disney had vigorously opposed the negative ISS recommendations. In recent SEC filings, Disney asserted that its action of combining the CEO and Chairman roles was part of a well thought-out succession and transition plan for its CEO who is expected to retire in 2016. Disney also stated that it expected to appoint an independent lead director with duties and responsibilities that, ironically, exceed in scope those recommended by ISS. Disney found that ISSs recommendation on its compensation plan are based on both flawed premises and methodology. Disney disputed ISSs choice of peer group and also compared its total shareholder return to that of the S&P 500 and found that it was four times greater during Mr. Igers tenure as CEO.
Disneys executive compensation plan was reportedly approved by 56.6% of the shares cast while 42.8% opposed. This is down from last year when 76.8% shares supported the compensation plan and 22.7% opposed it. Although Disney might deem this a win, it will be interesting to see if this relatively low approval rate will result in greater scrutiny of its compensation plan by shareholders and proxy advisory services next year.