The $24bn (€18.6bn) Connecticut Retirement Plans and Trust Funds are calling for the Walt Disney board to amend its corporate governance guidelines so that the CEO should only hold the position of chairman “in extraordinary circumstances”.
The entertainment giant has failed to persuade the Securities and Exchange Commission to let it omit the fund’s resolution on the matter from its next annual general meeting ballot.
Disney’s lawyers had written to the SEC in October seeking leave to omit the proposal from its proxy materials. They had argued it was “impermissibly vague and indefinite so as to be inherently misleading” – which was not accepted by the SEC.
“We are unable to concur on your view that Disney may exclude the proposal,” the SEC said in a letter to Disney’s lawyers at Cravath, Swaine & Moore dated November 15.
The SEC went on: “It appears that Disney’s policies, practices and procedures do not compare favorably with the guidelines of the proposal and that Disney has not, therefore, substantially implemented the proposal.”Connecticut State Treasurer Denise Nappier wrote to the SEC earlier this month setting out the rationale for including the motion on the proxy ballot. The Connecticut fund submitted a similar proposal in 2004.
“Disney’s policies, practices and procedures do not compare favorably with the proposal”
Earlier this month Responsible Investor reported that the UK institutions Legal & General Investment Management (LGIM) and Hermes Equity Ownership Services were seeking the right to nominate directors at Disney.
“We question whether certain aspects of Disney’s corporate governance provides appropriate accountability to shareholders,” their draft resolution states.
They pointed to the decision to recombine the roles of CEO and Chairman – despite a decision in 2004 to split them following a no vote against then-chief executive Michael Eisner. Disney’s next AGM is likely to take place in the first quarter of 2013.