SEC Staff Approves Pensions' Disney Proxy Proposal

December 13, 2004 ( - Staff members of the US Securities and Exchange Commission (SEC) have okayed a resolution by four large US pension funds allowing shareholders to propose their own director candidates at Walt Disney Co's annual meeting.

The decision from Robyn Manos, special counsel to the SEC’s Division of Corporation Finance, breaks new ground in the debate over investor access to corporate proxies, according to a Dow Jones report. Disney can still appeal the staff opinion.

Disney wanted regulators to allow it to ignore the proposal submitted in October (See   Pension Funds Propose Enhancing Shareholder Power at Disney ) by the:

  • California Public Employees’ Retirement System (CalPERS)
  • New York State Common Retirement Fund
  • American Federation of State County and Municipal Employees Pension Funds
  • Illinois State Board of Investment.

The nonbinding resolution opens an additional avenue for investors to put pressure on company boards while the SEC considers a related “proxy access” rule amid opposition from business groups.

Under the SEC’s controversial proposed rule – introduced more than a year ago — shareholders would win the right, under certain circumstances, to place director nominations directly in a corporate proxy (See  SEC Proposes Shareholder Notification Rules ). Under one prong of the proposed SEC rule, if a resolution submitted by a 1% shareholder or group of shareholders wins a majority of the votes cast, a company would be required to allow shareholders owning 5% of the company’s shares for at least two years to nominate directors on the company proxy the following year.