Disney Adopts Majority-Vote Rule
By MERISSA MARR
Staff Reporter of THE WALL STREET JOURNAL
August 19, 2005
Walt Disney Co.'s board adopted new rules that will force directors to offer their resignation if they don't receive a majority of votes cast for their re-election each year, a breakthrough for corporate-governance proponents and critics of Disney.
Disney said it had adopted the "majority vote" standard as a means of improving its governance. The rule requires board members failing to win majority support to volunteer their resignation to the board's governance and nominating committee, which in turn would recommend to the full board whether to accept it.
Disney long has been the subject of criticism over its corporate-governance standards and has spent several years trying to patch up the image of its board. That criticism came to a head at Disney's 2004 annual meeting when 45% of the votes cast withheld support for the re-election of Chief Executive and then-Chairman Michael Eisner to the board. Mr. Eisner later gave up his chairmanship. Under the new rule, Mr. Eisner would have been perilously close to being forced to offer his resignation from the board.
Corporate-governance proponents characterized the new rule as an aggressive move by a company not known for proactive governance steps. "This is a very positive development both for Disney, its shareholders and the world of corporate governance at large," said Greg Taxin, chief executive of Glass, Lewis & Co., a proxy-advisory firm in San Francisco. "It's clear this is a proactive step by the Walt Disney Company and one that is very shareholder friendly and that's unusual for the board. This may signal a change in tone and attitude from the board that shareholders should welcome."
In another move, the board amended the company's bylaws to add a provision prohibiting the buyback of any shares at above-market prices from any holder of more than 2% of Disney's voting shares, without shareholder approval.
Majority voting has become the hot-button issue in corporate-governance circles this year. The Council of Institutional Investors estimates that more than 84 shareholder proposals were put forward on the subject in the past proxy season. A pacesetter on governance issues, Pfizer Inc. has been among the first companies to voluntarily adopt the standard.
--Joann S. Lublin contributed to this article.
Write to Merissa Marr at merissa.marr@wsj.com
By MERISSA MARR
Staff Reporter of THE WALL STREET JOURNAL
August 19, 2005
Walt Disney Co.'s board adopted new rules that will force directors to offer their resignation if they don't receive a majority of votes cast for their re-election each year, a breakthrough for corporate-governance proponents and critics of Disney.
Disney said it had adopted the "majority vote" standard as a means of improving its governance. The rule requires board members failing to win majority support to volunteer their resignation to the board's governance and nominating committee, which in turn would recommend to the full board whether to accept it.
Disney long has been the subject of criticism over its corporate-governance standards and has spent several years trying to patch up the image of its board. That criticism came to a head at Disney's 2004 annual meeting when 45% of the votes cast withheld support for the re-election of Chief Executive and then-Chairman Michael Eisner to the board. Mr. Eisner later gave up his chairmanship. Under the new rule, Mr. Eisner would have been perilously close to being forced to offer his resignation from the board.
Corporate-governance proponents characterized the new rule as an aggressive move by a company not known for proactive governance steps. "This is a very positive development both for Disney, its shareholders and the world of corporate governance at large," said Greg Taxin, chief executive of Glass, Lewis & Co., a proxy-advisory firm in San Francisco. "It's clear this is a proactive step by the Walt Disney Company and one that is very shareholder friendly and that's unusual for the board. This may signal a change in tone and attitude from the board that shareholders should welcome."
In another move, the board amended the company's bylaws to add a provision prohibiting the buyback of any shares at above-market prices from any holder of more than 2% of Disney's voting shares, without shareholder approval.
Majority voting has become the hot-button issue in corporate-governance circles this year. The Council of Institutional Investors estimates that more than 84 shareholder proposals were put forward on the subject in the past proxy season. A pacesetter on governance issues, Pfizer Inc. has been among the first companies to voluntarily adopt the standard.
--Joann S. Lublin contributed to this article.
Write to Merissa Marr at merissa.marr@wsj.com
