Iger expects Disney to ride out downturn
CEO touts creative success at shareholder meetingNEW YORK -- Walt Disney is confident it will keep its creative successes going despite the economic downturn, CEO Robert Iger said Tuesday, speaking of the need to balance economic realism and operating optimism.
Speaking at the Paramount Theatre in Oakland at the company's annual shareholder meeting, he cited the current recession, saying it is likely "the most difficult economic (period) in our life time."
Iger went on to say: "I'm confident though that our brands, our products and our people can overcome (these challenges)."
The annual outing, meanwhile, voted against three shareholder proposals, including two high-profile proposals on executive pay.
In a shareholder Q&A Tuesday, one investor wished Disney board member Steve Jobs and his family good health and asked for contingency plans in case he has to leave the post for health reasons and in case Jobs' shares end up on the open market in the case of an untimely death.
Jobs recently said he would stay away from his day-to-day operational role as CEO of Apple until the summer while he addresses a health issue. A Disney spokesman said Jobs was not at Tuesday's meeting.
"We have not thought at all" about the issue, beyond thinking about his best health, chairman John Pepper said. "It's not something we worry about."
Executives added that Jobs, who holds about 7.4% of the company's stock, and his family make all the decisions about the Disney stake.
The shareholder still suggested Disney start looking at possible contingency plans, citing the challenges after the death in 1994 of Disney executive Frank Wells in a helicopter skiing accident, which led to the famous showdown between former chairman Michael Eisner and his former studio boss Jeff Katzenberg.
Pepper had opened the meeting with a similar nod to the "unique" economic challenges, but also said Disney is "confident" about its position given its strong brands and ability to create popular content.
Fun-filled vacations, world-class sports and movies "will always be treasured" by consumers, Pepper argued.
Pepper lauded Iger and his success, saying Disney under his leadership "has taken advantage more than ever of the exciting characters and properties this company has."
He also said that Disney's acquisition of Pixar is "already starting to pay off," pointing to Toy Story and other rides that have been added to Disney's theme parks as an example.
Meanwhile, Iger cited the recent best animated feature Oscar win for "WALL-E" as a great example for Disney's creative strength, which earned him strong applause from shareholders.
Shareholders also responded with much applause when Iger unveiled a new trailer for upcoming animated feature "Up" and an unfinished scene from 2-D-animated "The Princess and the Frog," which Disney on Tuesday moved up by two weeks to Dec. 11, with exclusive openings Nov. 25 in New York and Los Angeles. The move avoids head-to-head competition with Fox's "Alvin and the Chipmunks: The Squeakquel."
Iger also talked up the upcoming "Hannah Montana" feature and said work on "Toy Story 3" is well under way.
He also announced the names of two new Disney cruise ships: The Disney Dream will set sail in 2011, while the Disney Fantasy will start 2012.
Iger on Tuesday also formally unveiled D23, a membership club for Disney fans. At the annual meeting, shareholders re-elected all board members as suggested by management with more than 90% of the vote. The directors include Apple CEO Steve Jobs, who has been Disney's largest individual shareholder since the Pixar deal and who is taking a break from Apple's day-to-day operations because of health issues.
Meanwhile, three shareholder proposals were voted down at Disney's annual meeting. One widely watched proposal asked for a nonbinding, advisory vote by shareholders on the pay packages of top Disney executives. The "say on pay" initiative makes Disney one of about 100 companies that will face such proposals this shareholder season.
Pepper agreed that input is "very important," but he said Disney feels it is not warranted at this time and it wouldn't add much detail about which parts of pay packages shareholders are not happy with.
The Disney proposal had support from the California Public Employees' Retirement System and many other big institutional investors, but that still amounted to only 39% of the votes, according to an initial vote count announced at Tuesday's meeting.
Another shareholder offered the Disney board a golden nail, symbolizing his hope that the company would end a practice known as "golden coffin" schemes, which promises payments to family members after a top executive dies on the job.
This second proposal won approval from 27% of shareholders present and eligible to vote and came as activists plan to bring up the same issue at several other companies this shareholder meeting season.
Pepper argued against the proposal, saying the "golden coffin" practice has been phased out and will not be brought back, while its cost for Iger and other top brass doesn't justify the extra work and disruption of a formal ban. Heirs of Iger are eligible to collect $4.5 million if the CEO dies on the job.
Political contributions and decisions were the topic of a third shareholder proposal, which only garnered 24% of support. A supporter of it argued at Tuesday's meeting that Iger is putting politics ahead of business rationale, citing Disney's reluctance to market a DVD of ABC mini series "The Path to 9/11," which had led to complaints from former Clinton administration.
Pepper said the board reviewed the issue. "We are interested in making money," but the board felt this project would be "a loser" in terms of DVD economics. He added that the company is still open to potential offers from other companies that may want to acquire the rights for the DVD release.
Asked about the challenges of the digital space, Iger said it may not always necessarily provide direct financial benefits, but at least provides "great marketing and branding tools."
While recognizing the monetization challenges of the Internet and other digital platform, Iger said "in total, we have improved our revenue and bottom line" by being on digital platforms.
Disney management also got a question about its position on a potential return under the Obama administration of the Fairness Doctrine, which required broadcasters to offer equal time to both sides on controversial issues.
General counsel Alan Braverman said Disney hasn't taken a formal position yet as things would depend on any specific proposal. But he did say the company is a strong supporter of free speech, and the Fairness Doctrine raises First Amendment concerns.
In a moment of Disney magic, a young shareholder asked why Walt Disney had founded the company, with executives citing his love for children.
The young man then asked if the board could sign books for him, which Pepper agreed to do even before what appeared to be the shareholder's mother said he needed proof of his field trip to his first Disney shareholder meeting.