Mouse plays board games
Disney amends guidelines after Ovitz trial
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A week after receiving a smackdown for its corporate governance practices from the judge who presided over the Michael Ovitz golden parachute trial, Disney has amended its guidelines to make it easier to remove directors and tougher to buy off angry shareholders.
Decision by the Mouse House's board is the latest in a string of corporate rule changes made since a shareholder revolt at the 2004 annual meeting cost Michael Eisner his chairmanship.
It takes on added significance, however, coming just a week after Judge William B. Chandler III described Eisner as "Machiavellian" and "imperial" and said his behavior in the Ovitz saga "should not serve as a model for fellow executives."
In a change that gives more power to shareholder votes of no confidence like the one that nearly brought down Eisner last year, directors who receive a "withhold" vote from a majority of shareholders -- essentially a vote against retaining an unopposed candidate -- will now be required to submit their resignation.
Board's governance and nominating committee would then decide whether to recommend to the entire board that the resignation be accepted.
Last year, 43% of Mouse shares withheld a vote for Eisner, who ran unopposed.
Board also voted to approve a proposal from this year's annual meeting to forbid so-called greenmail, in which the company pays off a major shareholder causing grief, as Carl Icahn is currently doing to Time Warner and Roy Disney previously did for the Mouse House.
New rule prevents Disney from repurchasing shares at above-market price from a holder of more than 2% of the company's securities without shareholder approval.
"Today's action is the latest in a series of steps we have taken to further strengthen Disney's corporate governance practices," said chairman George J. Mitchell.
Last December, Disney changed exec compensation plans to require bigger equity stakes and include fewer stock options. Company has also shrunk its board and added more independent directors, as well as eliminating a "poison pill" antitakeover provision and separating the chairman and CEO jobs following the vote against Eisner.
Shares in Disney fell 1% to $26.08 Thursday before changes were announced.
