CalSTRS and PGGM write to fellow shareholders over Disney pay and governance

Leading institutions urge support at AGM

Two of the world’s leading pension institutions, CalSTRS and PGGM, have written to fellow shareholders in Walt Disney urging them to take action on governance issues at the entertainment giant’s forthcoming annual meeting.

CalSTRS, the $161.4bn (€123.2bn) California State Teachers Retirement System, and PGGM Investments, the €125bn Dutch pension fund service provider, wrote to investors ahead of Disney’s AGM on March 6.

They are urging them to vote against ratifying Disney’s executive pay and for two shareholder proposals on proxy access (the right of shareholders to nominate directors) and the separation of chairman and CEO.

“CalSTRS and PGGM are also long-term shareholders and we have concerns about recent decisions made by the board of Disney,” state the funds. The letter is signed by CalSTRS’ Director of Corporate Governance Anne Sheehan and PGGM’s Corporate Governance Advisor Catherine Jackson.

The proxy access proposal was tabled by Legal & General Investment Management, on behalf of Hermes Equity Ownership Services – but the company says it is “a solution in search of a problem that does not exist”.

And the separation of Chairman and CEO resolution was put forward by the Connecticut Retirement Plans and Trust Funds – the company says it is “vague and unworkable”.

CalSTRS and PGGM say they have engaged with the company in writing and in face-to-face meetings. And although they are pleased with Disney’s recent stock performance, they say “there are certain governance structures that are lacking at Disney which would serve to protect the investment of our beneficiaries andsafeguard the Company’s continued long-term success”.
“We believe that Disney is an iconic company and we want it, and our investment, to have continued and sustainable success in the future,” Sheehan and Jackson state.

The advisory vote to ratify executive pay has already been voted against by the American Federation of State, County and Municipal Employees (AFSCME), Domini Social Investments, Christian Brothers Investment Services, Trillium and CalSTRS, according to advance voting information.

The same investors have voted for the two shareholder proposals.

“Disney is an iconic company and we want it to have continued and sustainable success”

At last year’s AGM the say-on-pay vote received support from only 57% of voting shareholders and this followed a vote of only 77% support the year before, CalSTRS and PGGM argue. They say the board’s response has been “inadequate”.

“Under these circumstances, we consider it is in the best interests of our beneficiaries to vote against the Say on Pay vote at the 2013 annual shareholders’ meeting.”

Immediately following the release of the letter Disney put out a brief statement saying: “The facts are irrefutable: Disney delivered record net income, revenue and earnings per share and exceptional shareholder returns in fiscal 2012.” Disney proxy