Disney Rejects Proxy Adviser Criticism of Pay, Governance

Robert Iger
Robert Iger, president and chief executive officer of Walt Disney Co. Photographer: Peter Foley/Bloomberg

Walt Disney Co. said it “fundamentally disagrees” with an advisory group’s criticism of its pay practices and the process for naming Chief Executive Officer Robert Iger to the added role of chairman.

Institutional Shareholder Services, which consults on governance issues, has recommended voting against members of Disney’s governance and nominating committee and criticized the compensation of Iger, the Burbank, California-based company said today in regulatory filings.

The company accused ISS of second-guessing its independent directors and urged shareholders to back the board’s decisions. The filings are designed to bolster support for Disney ahead of the March 13 annual meeting, when all 10 board nominees will be up for re-election, including four ISS opposes.

“Disney fundamentally disagrees with certain of ISS’s recommendations, which are based on both flawed premises and methodology,” the company said in a statement.

The October decision to make Iger chairman when John Pepper steps down this month represents an “about-face” from reforms adopted in 2004 when then-chairman Michael Eisner relinquished the title under pressure from shareholders, ISS said.

“We are not second-guessing the board’s rationale for choosing to recombine the roles, or its right to do so,” ISS said in a Feb. 29 report. “We are highlighting concerns with the process underlying the board’s action, which reversed an earlier commitment to independent board leadership without transparency or shareholder input.”


Iger’s pay has climbed to $30 million from $17.3 million over a six-year period, ISS said in the 28-page document. While Disney increased the dividend by 50 percent last year, an investment of $100 in the stock five years ago was worth only $105 at the end of fiscal 2011, the group said.

The ISS assertion that Disney “reversed a commitment to independent board leadership without conducting outreach to shareholders beforehand” is false, the company said, adding no such pledge existed.

The company lived up to its commitment by explaining the decision and appointing an independent lead director, according to the filing. Iger’s pay is “entirely in line” with that of its media peers that include CBS Corp., News Corp., Time Warner Inc., Viacom Inc. and Comcast Corp., the company said.

Disney also said a $100 investment made when Iger took over in October 2005 had appreciated to $171 as of year-end, while comparable companies returned no more than $136.

Disney rose 1 percent to $42.39 at the close of trading in New York. The stock has gained 13 percent this year.

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