ITEMS TO BE VOTED ON
Proposal Non-Management Employees on Director Nominee Candidate Lists
James McRitchie has notified the Company that he intends to present the following proposal for consideration at the annual meeting.
Increase Diversity of Director Nominees
Resolved: Shareholders of
Walt Disney Company (Disney or Company) urge the board to adopt a policy (Policy) of promoting significant representation of employee perspectives among corporate decision makers by requiring the initial list of
candidates from which new director nominees are chosen (Initial List) by the Nominations and Governance Committee include (but need not be limited to) non-management employees. The Policy should
provide that any third -party consultant asked to furnish an Initial List will be requested to include such candidates.
Whereas: There is growing
consensus that employees on corporate boards can contribute to long-term corporate sustainability. Policymakers note, having companies run exclusively to benefit shareholders contributes to stagnant wages, runaway executive compensation and
underinvestment in research and innovation.1 The Business Roundtable asks corporations to align with stakeholder interests, including
employees.2
Employee representation grows long-term value of companies in several ways. According to the
National Bureau of Economic Research, giving workers formal control rights increases female board representation and raises capital formation.3 Employees are also often more diverse than boards in
terms of race, gender, and wealth. The German co -determination model of shared governance is lauded as an excellent check against short-term capital allocation practices.4
The 2018 UK Corporate Governance Code calls on boards to establish a method for gathering workforce views. Options include a director appointed from the workforce, a
formal workforce advisory panel or designating a director to liaise with workers.5
Senators Baldwin and Warren
have introduced legislation codifying employee representation on corporate boards, noting that modern corporate governance needs to be accountable to a wider array of interests, notably
employees.6 Polling demonstrates bipartisan public support (over 53%) for employee representation.7
Anticipated benefits include reduced turnover as employees are more empowered to make firm-specific investments, better informed decision-making because employees have
specialized knowledge, better monitoring of management with increased information channels, and reduced shareholder myopia since employees often take a longer-term view.8
While our Board satisfies independence requirements, it lacks representation from non-management employees, who bring a different
understanding of operations than other directors. Additionally, Disneys CEO to median employee pay ratio is 911:1 and Disney has no employee stock ownership plan (ESOP) to help grow employee wealth and engagement.9
The Policy we propose resembles the Rooney Rule, which requires teams to interview minority candidates for
head coaching and senior operations openings. By adopting the Rooney Rule, National Football League teams increased diversity and set a precedent for other industries. Policies similar to the Rooney Rule have been adopted by Amazon, Costco, Home
Depot, Activision Blizzard, Dover, Expedia, Fastenal, Hilton Worldwide Holdings, L Bands, Robert Half International, Ross Stores and others.
Increase Long-Term Shareholder Value
Vote to
Increase Diversity of Director Nominees
Board Recommendation
The Board recommends that you vote against this proposal as the Governance and Nominating Committees thorough process of evaluating potential director candidates
already ensures a diversity of perspectives, and the addition of non-management employees would decrease the level of independence on the Board.
The proposal seeks to supersede the careful judgement of the Board as to the criteria that should be reflected in a director candidate pool. As described in the section
of this proxy statement titled Director Selection Process, the Governance and
1
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https://www.nytimes.com/2019/01/06/opinion/warren-workers-boards.html
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2
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https://opportunity.businessroundtable.org/wp-content/uploads/2020/06/BRT-Statement-on-the-Purpose-of-a-Corporation-with-Signatures.pdf
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3
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http://economics.mit.edu/files/17273
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4
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https://rooseveltinstitute.org/wp-content/uploads/2017/10/Corp-Gov_FINAL.pdf
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5
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https://assets.kpmg/content/dam/kpmg/uk/pdf/2018/07/designated-NED.pdf
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6
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https://www.wsj.com/articles/companies-shouldnt-be-accountable-only-to-shareholders-1534287687
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7
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https://www.dataforprogress.org/blog/2018/12/14/employee-governance
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8
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https://www.corpgov.net/2020/04/kokkinis-and-sergakis-employee-participation-in-uk-companies/
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9
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https://smlr.rutgers.edu/sites/default/files/rutgerskelloggreport_april2019.pdf
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THE WALT DISNEY COMPANY NOTICE OF 2021 ANNUAL MEETING AND PROXY STATEMENT 73