Nestle Shareholders Reject Pension Fund Dual Exec Prohibition

April 15, 2005 ( - In a scenario that echoed goings-on at The Walt Disney Co., food group Nestle has successfully fought off a corporate governance proxy initiative from a group of pension funds to block Nestle's CEO from also becoming chairman.

The motion by the Ethos Group – which represents Swiss pension funds – was defeated at the Nestle annual meeting in Lausanne with 35.94% shares being voted in favor and 50.55% against, according to an IPE report. The proposal would have prevented chief executive Peter Brabeck from also becoming chairman.

The resolution was backed by five pension funds including the Canton of Jura, City of Zurich and Canton of Luzern holding a combined 0.25% of shares. The group also got support from international consultant Deminor and Institutional Shareholder Services, a prominent US proxy voting advisor.

“I want to congratulate shareholders for having made the right decision,” said Brabeck after the vote, according to the IPE report. “The dogmatic approach to corporate governance issues would have meant a long-term competitive disadvantage for Nestlé.”

Nestle officials told IPE that they did not regard Barabek’s dual role as a corporate governance problem.

US entertainment giant Disney was in much the same position when institutional shareholders led a drive against chief executive Michael Eisner (See  Eisner Protest Vote Reaches 43% ). Many of the fund representatives said that they were particularly troubled about the dual roles Eisner held as chairman and chief executive officer. Eisner was eventually stripped of his chairmanship.

In mid-March, Disney announced that Eisner will step down a year earlier than expected and that Robert Iger would be his successor. Iger, 54, the firm’s current president and chief operating officer, will assume his new role October 1 and will co-lead the company with Eisner during the transition, Disney’s board said.