(The Hollywood Reporter) — One week after the Walt Disney Co. was again chided for formerly weak corporate governance practices, the firm said Aug. 18 that it has amended its guidelines for the removal of directors and to prevent the company from overpaying large shareholders when purchasing their stock.
The latter practice, known as greenmail, is a tactic companies often employ when trying to make activist shareholders happy. In Disney’s case, the new guidelines forbid the company from paying above-market prices for stock held by anyone holding more than 2% of Disney’s voting stock, at least not without shareholder approval.
Pertaining to the removal of directors, Disney said that from now on, directors who receive a majority “withhold” vote from among all votes cast in board elections “would be required to submit a letter of resignation to the board’s governance and nominating committee, which in turn would recommend to the full board whether the resignation should be accepted.”
That change in governance policy comes a year after CEO Michael Eisner received a 45% no-confidence vote at a shareholder meeting, leading to him giving up his board chairmanship.
While Disney has been diligently rewriting its corporate governance guidelines since publicly battling former board members Roy E. Disney and Stanley Gold, the company still gets the occasional rebuke.
The latest was from a Delaware judge, while deciding in Disney’s favor in the shareholder lawsuit regarding the infamous hiring and firing of Michael Ovitz, nevertheless noted that conduct from Disney executives and board members back then “fell significantly short of the best practices of ideal corporate governance.”
Other steps Disney has taken recently to shore up its governance include separating the positions of CEO and chairman; setting annual terms for board members; requiring board members to own a minimum of $100,000 in Disney stock; reducing the number of board members from 16 to 12; and limiting the number of boards on which a Disney director may serve.
