ISS recommends OK for Disney board
By David B. Wilkerson, MarketWatch
Last Update: 5:09 PM ET Jan. 25, 2005
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SAN FRANCISCO (MarketWatch) -- Institutional Shareholder Services recommended Tuesday that Walt Disney Co. shareholders approve the re-election of all members of the Disney board of directors at the company's annual shareholder meeting next month -- including Chief Executive Michael Eisner, who was ousted from the chairman role during the tempestuous 2004 meeting.
Disney's annual meeting will be held Feb. 11 in Minneapolis.
In a statement, the Rockville, Md.-based provider of proxy voting and corporate governance services quoted Disney Chairman George Mitchell as saying the company has "learned a lot of lessons" since last year's meeting and has made progress in adopting good governance practices.
"Critics may argue that Disney (DIS: news, chart, profile) made its positive governance changes only when it was under the harsh glare of shareholder criticism, and wonder whether the company will continue to embrace shareholder rights going forward," ISS said. "Nevertheless, the fact that the company has taken positive steps is a gain for shareholders."
Among several moves, Disney appointed an independent search firm to find a replacement for Eisner, who said that he will step down as CEO in 2006 and resign from the board.
It also pledged to place more independent directors on its board, and did so in December, bringing in Fred Langhammer, chairman of Global Affairs for Estee Lauder. Earlier this month, it amended its corporate governance guidelines to reflect the separate roles of board chairman and chief executive.
The firm is also impressed with the financial turnaround that appears to be taking place at Disney, noting that fiscal 2004 earnings jumped 72 percent from the previous year, excluding the effects of an accounting change. The company's move last month to raise its dividend 14 percent to 24 cents a share was also mentioned as a positive.
Improved attendance at the theme parks and an about-face at the ABC Television Network this season have helped Disney stock accelerate 25 percent from its mid-August level of $21. The shares rose 85 cents to $28.80 Tuesday.
Disney board members also include: Bob Iger, the company's president and chief operating officer, who is seen as the front-runner for the CEO job when Eisner leaves; John Bryson, chairman of Edison International, the parent of electric utility Southern California Edison; John Chen, chairman of software developer Sybase Inc.; Judith Estrin, co-founder and chief executive of Packet Design LLC, a computer networking technology provider; Alwyn Lewis, chief executive of retailer Kmart; Monica Lozano, publisher of the Spanish-language newspaper La Opinión; Robert Matschullat, a private equity investor; Fr. Leo Donovan, president emeritus of Georgetown University; and Gary Wilson, chairman of Northwest Airlines Corp.
ISS also recommends that PriceWaterhouseCoopers LP be approved as Disney's auditor for the coming year.
The firm said shareholders should OK Disney's omnibus stock incentive plan for all employees and non-employee directors. Under the plan, the board can grant individuals incentive stock options, non-incentive stock options, restricted stock or stock units based on certain performance criteria. The firm said it's convinced that Disney's executive compensation program is "heading towards the right direction," following revisions announced last month.
Additionally, the consultant recommends approval of a proposal that the company never pay greenmail to any would-be corporate raider. When an individual buys a substantial amount of stock in a company, then agrees to sell the stock back to the company in exchange for not trying a hostile takeover, the payment given to the individual is known as greenmail.
Disney management is against the proposal, ISS said, saying that it's too broad. ISS counters that there is no anti-greenmail policy in Disney's existing charter or its bylaw amendments.
Finally, ISS said the New York Comptroller's proposal that Disney prepare a report disclosing the extent to which Disney's suppliers in China are complying with International Labor Organization laws should be rejected.
The consultant acknowledged that certain contract manufacturers hired by licensees and vendors for Disney's Chinese manufacturing operations have been accused of various workplace labor rights violations. But ISS said shareholders should "accept the company's commitment to improve policies and disclosure through its ongoing [monitoring] program and scheduled reports."
David B. Wilkerson is a reporter for MarketWatch in San Francisco
By David B. Wilkerson, MarketWatch
Last Update: 5:09 PM ET Jan. 25, 2005
E-mail it | Print | Alert | Reprint | RSS
SAN FRANCISCO (MarketWatch) -- Institutional Shareholder Services recommended Tuesday that Walt Disney Co. shareholders approve the re-election of all members of the Disney board of directors at the company's annual shareholder meeting next month -- including Chief Executive Michael Eisner, who was ousted from the chairman role during the tempestuous 2004 meeting.
Disney's annual meeting will be held Feb. 11 in Minneapolis.
In a statement, the Rockville, Md.-based provider of proxy voting and corporate governance services quoted Disney Chairman George Mitchell as saying the company has "learned a lot of lessons" since last year's meeting and has made progress in adopting good governance practices.
"Critics may argue that Disney (DIS: news, chart, profile) made its positive governance changes only when it was under the harsh glare of shareholder criticism, and wonder whether the company will continue to embrace shareholder rights going forward," ISS said. "Nevertheless, the fact that the company has taken positive steps is a gain for shareholders."
Among several moves, Disney appointed an independent search firm to find a replacement for Eisner, who said that he will step down as CEO in 2006 and resign from the board.
It also pledged to place more independent directors on its board, and did so in December, bringing in Fred Langhammer, chairman of Global Affairs for Estee Lauder. Earlier this month, it amended its corporate governance guidelines to reflect the separate roles of board chairman and chief executive.
The firm is also impressed with the financial turnaround that appears to be taking place at Disney, noting that fiscal 2004 earnings jumped 72 percent from the previous year, excluding the effects of an accounting change. The company's move last month to raise its dividend 14 percent to 24 cents a share was also mentioned as a positive.
Improved attendance at the theme parks and an about-face at the ABC Television Network this season have helped Disney stock accelerate 25 percent from its mid-August level of $21. The shares rose 85 cents to $28.80 Tuesday.
Disney board members also include: Bob Iger, the company's president and chief operating officer, who is seen as the front-runner for the CEO job when Eisner leaves; John Bryson, chairman of Edison International, the parent of electric utility Southern California Edison; John Chen, chairman of software developer Sybase Inc.; Judith Estrin, co-founder and chief executive of Packet Design LLC, a computer networking technology provider; Alwyn Lewis, chief executive of retailer Kmart; Monica Lozano, publisher of the Spanish-language newspaper La Opinión; Robert Matschullat, a private equity investor; Fr. Leo Donovan, president emeritus of Georgetown University; and Gary Wilson, chairman of Northwest Airlines Corp.
ISS also recommends that PriceWaterhouseCoopers LP be approved as Disney's auditor for the coming year.
The firm said shareholders should OK Disney's omnibus stock incentive plan for all employees and non-employee directors. Under the plan, the board can grant individuals incentive stock options, non-incentive stock options, restricted stock or stock units based on certain performance criteria. The firm said it's convinced that Disney's executive compensation program is "heading towards the right direction," following revisions announced last month.
Additionally, the consultant recommends approval of a proposal that the company never pay greenmail to any would-be corporate raider. When an individual buys a substantial amount of stock in a company, then agrees to sell the stock back to the company in exchange for not trying a hostile takeover, the payment given to the individual is known as greenmail.
Disney management is against the proposal, ISS said, saying that it's too broad. ISS counters that there is no anti-greenmail policy in Disney's existing charter or its bylaw amendments.
Finally, ISS said the New York Comptroller's proposal that Disney prepare a report disclosing the extent to which Disney's suppliers in China are complying with International Labor Organization laws should be rejected.
The consultant acknowledged that certain contract manufacturers hired by licensees and vendors for Disney's Chinese manufacturing operations have been accused of various workplace labor rights violations. But ISS said shareholders should "accept the company's commitment to improve policies and disclosure through its ongoing [monitoring] program and scheduled reports."
David B. Wilkerson is a reporter for MarketWatch in San Francisco