Major UK investors seek right to nominate directors at Walt Disney

Legal & General, Hermes in ‘proxy access’ move at entertainment giant

Major UK investment institutions Legal & General Investment Management (LGIM) and Hermes Equity Ownership Services are seeking the right to nominate directors at entertainment giant Walt Disney.

Legal & General, acting on behalf of its client Hermes EOS, has tabled a resolution for Disney’s annual general meeting next year calling on the company to adopt a “proxy access” bylaw, enabling shareholders with at least a 3% stake to nominate directors.

Hermes EOS is part of the Hermes fund management group that is ultimately owned by the BT Pension Scheme. It acts on behalf of 30 clients globally with over £120bn assets under stewardship. LGIM is one of Europe’s largest institutional asset managers and manages £391bn.

“We question whether certain aspects of Disney’s corporate governance provides appropriate accountability to shareholders,” the draft resolution states.

The investors point 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.And they note “continued shareholder concerns” about executive pay, as evidenced by last year’s 43% vote against Disney’s pay practices. The investors also point out that computer giant Hewlett-Packard is introducing a management proposal for its AGM this year urging shareholders to vote for a similar reform.

The draft proposal was sent to Disney’s Corporate Secretary Alan Braverman in September, as the company prepares for its annual meeting, likely to take place in the first quarter of 2013.

Disney’s New York-based law firm Cravath, Swaine & Moore last month sought permission from the Securities and Exchange Commission (SEC) to omit the shareholder proposal from its proxy materials because it is “impermissibly vague and indefinite”.

Separately, Hermes EOS has put forward a remedy for the “disease” in the banking industry, saying current proposals only address the symptoms rather than tackling the problem. It has issued a paper Epidemiology – next steps for banking regulation which focuses on eradicating three elements. They are: the failure to focus fully on the needs of the client, the focus on transactions; and the “persistent desire” to ignore or game regulation.