Shareholders of Walt Disney Co. met earlier this month to vote whether to re-elect the company’s board. The entire board was re-elected decisively, snuffing out a potential shareholder dispute.
At issue was a proposal by one investor that would have split the CEO and chairman jobs. Both roles are currently held by the same person, who has been praised for his management of the company. That management resulted in all-time stock records, which may have been responsible for his election to chairman in 2012.
The shareholder who made the proposal, an investor through her state employer’s pension funds, was not present at the meeting but had a representative speak on her behalf. The representative said, “A large, highly integrated organization like Disney simply does not work most effectively when the CEO manages the board responsible for overseeing him and evaluating his performance.”
This does raise some concerns about CEO oversight. In the event of any misconduct on the part of the CEO or the board, proponents of the proposal to separate the roles may wonder what will happen. Some people support keeping roles separate to institute a system of checks and balances that keeps all players accountable to someone else.
If you are a business owner, board member or shareholder engaged in a dispute over the future of a business, tensions can run high. It may be wise to bring in a neutral party who can help all involved keep a cool head while pursuing the best possible outcome for the business. Consider meeting with an experienced business law attorney who knows the relevant state and federal regulations.
Source: Carrier Management, “Disney Shareholders Reject CEO/Chair Split,” Lisa Richwine, March 6, 2013
To learn more about legal issues facing New Jersey businesses, please visit our website.