Disney changes rules for combined CEO and chairman positions

In advance of the Walt Disney Co.’s annual shareholder meeting on Tuesday, the company disclosed in a regulatory filing that it had made a change to its Corporate Governance Guidelines so that the board of directors would have to provide annual justification for having one person hold the chairman and chief executive positions.

Disney Chairman and Chief Executive Robert Iger has had both of those jobs since 2012.

The change headed off a proposal from a group of investors, including the California State Teachers Retirement System, that was seeking a shareholder vote on whether owners of 3% or more of company stock could nominate candidates to the board.

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Disney, based in Burbank, said in the U.S. Securities Exchange Commission filing that the chairman position “shall in the normal course be an independent director unless the board concludes that, in light of the circumstances then present when any such decision is made, the best interests of shareholders would be otherwise better served.”

Disney’s filing said that if the board determines in the future that the chairman role should not be filled by an independent director, the board would provide a written statement in its proxy materials discussing why the arrangement would be in the best interest of shareholders. Then, each year after such an arrangement remains in place, the board would determine whether it is still in the best interest of investors and provide a written statement giving reasons for this conclusion.

The proposal from the group of investors was withdrawn, according to the filing.

Disney’s annual meeting is being held Tuesday morning in Portland, Ore.

The issue of an independent chairman dates to 2004, when Disney shareholders cast a no-confidence vote in Michael Eisner, then the company’s chairman and chief executive. After the vote, the Disney board separated the roles.

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But, in fall 2011, the company’s board announced it would make Iger, then chief executive, the new chairman after the 2012 retirement of then-chair John Pepper. Iger’s contract calls for him to hold the chairman and chief executive positions until June 2016.

Disney has previously told shareholders that the decision to combine the roles was done, in part, because it was in the best interest of its succession plan.

At last year’s annual meeting, shareholders voted down a proposal that called for the future split of the chief executive and chairman positions. At that meeting, held in Phoenix, the company said that only 35.3% of shareholders who cast non-binding votes in advance of the meeting approved the split.

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