The Walt Disney Company has filed additional soliciting material here and here in response to negative ISS recommendations. ISS has recommended against voting for the members of Disney’s Governance and Nominating Committee as a result of appointing its Chief Executive Officer as Chairman of the Board as part of a reasoned CEO succession strategy. ISS has also recommended against Disney’s position on say-on-pay.
According to Disney it “fundamentally disagrees with certain of ISS’s recommendations, which are based on both flawed premises and methodology. The Company’s Board of Directors adheres to a rigorous performance test for compensation, and the Company’s tremendous performance under Bob Iger is evident. Disney had record financial performance in Fiscal Year 2011 and its total shareholder return is more than four times greater than that of the S&P 500 during Mr. Iger’s more than six years of leadership. After careful and considered deliberation, the Board took action to secure Mr. Iger’s leadership through his expected retirement in 2016 to provide for an effective, seamless succession and management transition and continuity of the Company’s proven strategy. In addition, the board will appoint an independent lead director with duties and responsibilities that, ironically, exceed in scope those recommended by ISS.”
Last year, ISS apparently had two issues with Disney’s proxy statement. ISS objected to tax gross-ups in executive employment agreements. ISS also recommended voting for a shareholder proposal regarding performance tests for restricted stock unit awards.
Disney ultimately eliminated the tax gross-ups from the executive employment contracts prior to the meeting. Perhaps after engaging with a few key shareholders, it determined that absent such action its rational set forth in response to ISS’s recommendation was not going to carry the day. The key here however was there was something Disney could do, given the cooperation of its executives. By taking that action, it avoided the embarrassment of a failed vote and having to spend board resources to deal with the issue in the upcoming year. Perhaps Disney also reasoned that by removing that institutional irritant it was more likely institutions would not be persuaded by what appeared to be ISS’s weak recommendation with respect to the shareholder proposal on restricted stock units.
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