CalSTRS announced its vote at the March 6, 2013, Walt Disney Company annual shareholder meeting. CalSTRS voted against several directors and management proposals, and voted for shareholder proposals to allow proxy access and separate the CEO and chairman positions. What is significant about the announcement is that it went over each director candidate and issue on the ballot and not only disclosed how CalSTRS voted but why. Here’s the thrust of their press release.
CalSTRS continues to be troubled by the company’s decision to recombine its Board Chair and Chief Executive Officer positions and the executive pay structures at Disney. CalSTRS attributes the poor governance structure and compensation plans to an entrenched and insular board that lacks independence from the CEO.
“Here we go again, sliding back into a governance structure that has already proved detrimental to the company’s long-term growth and to its shareholders’ interests,” said CalSTRS Director of Corporate Governance Anne Sheehan. “We’ve been through this fight before, in 2004-05, which resulted in the ouster of then-CEO Michael Eisner and a shareholder revolt that led to the separation of the Board Chair and CEO positions.”
As a long-term owner-investor, CalSTRS believes directors in the boardroom are there to represent shareholders and to serve the shareholders’ interests, not the CEO’s. CalSTRS owns 5,282,341 shares of Disney stock worth $263 million, which represents 0.3 percent of the outstanding shares.
You can read a pdf of the rationale used by CalSTRS here. I hold Disney shares myself and will be posting how I voted my proxy at the end of the month. However, I can tell just from first glance it will be very close to how CalSTRS voted.
CalSTRS was one of the first large pension plans to announce their votes on ProxyDemocracy.org. As I upload this post, the CalSTRS votes at Disney haven’t yet been loaded up but probably will within a few days. When CalSTRS, Florida SBA and other funds began announcing on ProxyDemocracy.org it was revolutionary because institutional investors and retail shareowners could see how they vote and could begin to view other funds as brands.
They could see how these funds voted and see they could be trusted. If we don’t have the time to fully analyze each proxy item, we could trust these brands who seem to be voting similarly to us when we did our homework… and these large public pension funds were large enough that they covered most of the companies in anyone’s portfolio (except for small and micro-caps).
Still, we would occasionally ask ourselves why they were voting for or against a specific director or issue. Providing the reasons for their votes takes us to the next level of trust. Even if it doesn’t continue, we can see the thoughtful rationale CalSTRS used in making its Disney vote and we can assume they are as thoughtful in all their votes. Still, wouldn’t it be great if we could always know why funds are voting as they do?
I’ll get into an analysis of each Disney proxy item when I announce my vote. Here, I just wanted to congratulate CalSTRS for announcing the reasons for their votes and for carrying the revolution in responsible shareOWNERSHIP to the next level.