SEC Staff: Disney Can't Omit Split CEO/Chair Resolution
By PHYLLIS PLITCH
December 20, 2004 4:35 p.m.
Of DOW JONES NEWSWIRES
NEW YORK -- The Securities and Exchange Commission staff has given a green light to a shareholder resolution calling on Walt Disney Co. (DIS) to permanently split the chairman and CEO jobs, rebuffing the entertainment giant's efforts to block the proposal.
Disney had tried to keep the non-binding resolution - submitted in September by the Connecticut Retirement Plans & Trust Funds - out of its 2005 annual meeting shareholder-voting materials.
The resolution is one of two that Disney argued did not pass legal muster, and thus could not legally be voted on by shareholders. Earlier this month, the SEC staff sided with investors on a controversial resolution aimed at initiating a process for shareholders to directly nominate directors. Disney has appealed that staff decision to the SEC commissioners.
A Disney spokesman couldn't immediately be reached for comment.
The resolution calls on Disney to cement a company policy that the chairman will always be an independent director, "except in rare and explicitly spelled out, extraordinary circumstances."
But in a letter to the SEC division of corporation finance, a Disney attorney argued that the resolution is out of line with several provisions of the proxy rules, including one that allows companies to omit proposals because the company "would lack the power and authority to implement the proposal." Disney couldn't guarantee that it will have an available independent director to fill the chairman's role at all times, the company said.
The SEC staff apparently disagreed. In a letter dated late last month, Heather I. Maples, special counsel in the division of corporation finance, countered that based on Disney's legal arguments, the division couldn't bless the company's exclusion of the resolution from its proxy.
The decision follows heavy criticism by Connecticut's treasurer, Denise L. Nappier, who lashed out at the company's attempt to block the shareholder vote in a letter to chairman George Mitchell last month.
Mitchell took over as chairman after the last annual meeting in March where investors withheld 45% of their votes for the reelection of CEO and then board-chair Michael Eisner. Eisner had been the subject of attacks by two dissident former directors who were taken off the board and who accused Eisner and others of mismanaging the company.
But Connecticut, which owns more than a million Disney shares, wants an independent board chair to be a permanent feature of the company's governance structure.
If shareholders do ultimately get to vote on the proposals, it remains to be seen how much support anti-Disney forces can drum up amid improvement in the company's fortunes and a promise by Eisner to leave as CEO by 2006.
-By Phyllis Plitch, Dow Jones Newswires, 201-938-2357; phyllis.plitch@dowjones.com
By PHYLLIS PLITCH
December 20, 2004 4:35 p.m.
Of DOW JONES NEWSWIRES
NEW YORK -- The Securities and Exchange Commission staff has given a green light to a shareholder resolution calling on Walt Disney Co. (DIS) to permanently split the chairman and CEO jobs, rebuffing the entertainment giant's efforts to block the proposal.
Disney had tried to keep the non-binding resolution - submitted in September by the Connecticut Retirement Plans & Trust Funds - out of its 2005 annual meeting shareholder-voting materials.
The resolution is one of two that Disney argued did not pass legal muster, and thus could not legally be voted on by shareholders. Earlier this month, the SEC staff sided with investors on a controversial resolution aimed at initiating a process for shareholders to directly nominate directors. Disney has appealed that staff decision to the SEC commissioners.
A Disney spokesman couldn't immediately be reached for comment.
The resolution calls on Disney to cement a company policy that the chairman will always be an independent director, "except in rare and explicitly spelled out, extraordinary circumstances."
But in a letter to the SEC division of corporation finance, a Disney attorney argued that the resolution is out of line with several provisions of the proxy rules, including one that allows companies to omit proposals because the company "would lack the power and authority to implement the proposal." Disney couldn't guarantee that it will have an available independent director to fill the chairman's role at all times, the company said.
The SEC staff apparently disagreed. In a letter dated late last month, Heather I. Maples, special counsel in the division of corporation finance, countered that based on Disney's legal arguments, the division couldn't bless the company's exclusion of the resolution from its proxy.
The decision follows heavy criticism by Connecticut's treasurer, Denise L. Nappier, who lashed out at the company's attempt to block the shareholder vote in a letter to chairman George Mitchell last month.
Mitchell took over as chairman after the last annual meeting in March where investors withheld 45% of their votes for the reelection of CEO and then board-chair Michael Eisner. Eisner had been the subject of attacks by two dissident former directors who were taken off the board and who accused Eisner and others of mismanaging the company.
But Connecticut, which owns more than a million Disney shares, wants an independent board chair to be a permanent feature of the company's governance structure.
If shareholders do ultimately get to vote on the proposals, it remains to be seen how much support anti-Disney forces can drum up amid improvement in the company's fortunes and a promise by Eisner to leave as CEO by 2006.
-By Phyllis Plitch, Dow Jones Newswires, 201-938-2357; phyllis.plitch@dowjones.com