Disney Shareholders Urged to Rethink CEO Bob Iger's Compensation

3:46 PM PST 02/26/2013 by Paul Bond
Janette Pellegrini/Getty Images
Bob Iger

Pension funds CalSTRS and PGGM do not consider incentives for execs to be in line with shareholder interests.

Efforts to separate the CEO and chairman roles at the Walt Disney Co. and to rework the formula for Bob Iger's compensation were stepped up Tuesday.

Iger has been both CEO and chairman since last year, though those roles had been split since a shareholder revolt in 2005 led to the ouster of then-CEO Michael Eisner.

Some pension funds are urging large shareholders to vote in favor of a shareholder proposal to separate the roles again, and to vote against "the advisory vote on compensation."

STORY: Giant Pension Fund Will Vote Against Disney CEO Bob Iger Remaining as Chairman

On Tuesday, the two pension funds -- the California State Teachers' Retirement System and PGGM Investments in the Netherlands -- got some support from Proxy advisers Glass, Lewis & Co. and ISS, which offered advice that mirrored the wishes of the two pension funds on those two issues.

CalSTRS and PGGM wrote in a letter addressed to "Disney Shareholders" that "[w]hile we are pleased with Disney's recent stock performance, we believe there are certain governance structures that are lacking at Disney which would serve to protect the investment of our beneficiaries and safeguard the company's continued long-term success."

In fiscal 2012, Iger was paid $40 million in total compensation, up 20 percent over the year prior. In that same timeframe, Disney stock rose 76 percent.

The letter from CalSTRS and PGGM also said, "We believe a compensation program that is properly structured is essential to ensure executive interests are aligned with shareholders. Unfortunately, we consider this not to be the case at Disney."

Disney shareholders will vote on those proposals and more at the annual meeting on March 6 in Phoenix.

Disney responded Tuesday with a regulatory filing reading:

"The facts are irrefutable: Disney delivered record net income, revenue and earnings per share and exceptional shareholder returns in fiscal 2012. Total shareholder return for the year was 76.3 percent, compared to 30.2 percent for the S&P 500.

"Disney's performance during Mr. Iger's tenure has been nothing short of spectacular, with total shareholder return of 139 percent that dramatically exceeds the S&P 500's return of 36 percent, and 15 percent growth in diluted earnings per share on a compounded basis. Disney has delivered results that speak for themselves."

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