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Major Disney Shareholder Says Board Members Should Be Replaced

The Disney board of directors wants to let one person hold the title of CEO and chairman — a move Connecticut’s treasurer, who controls 642,000 shares, strongly opposes

The Walt Disney Company's plan to allow one person — Bob Iger — to be both CEO and chairman of the board, is a terrible idea, Connecticut's state treasurer says.

It's such a bad idea, Denise L. Nappier says, she is calling on shareholders to remove four members of the company's board of directors.

Nappier is the main officer of the state's retirement plans and trust funds, which hold more than 642,000 Disney shares worth about $27 million.

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She is unhappy with the company's Nominating and Governance Committee, which reversed its policy of having an independent board chairman. Since 2005, Disney had a policy prohibiting one person from serving as both chairman of the board and CEO.

Now that John Pepper is retiring as chairman of the board of directors, Iger, the CEO, is slated to take the job.

Nappier hates the idea, and, in October, wrote to Pepper saying one person shouldn't hold both jobs.

"What were the members of the Disney Nominating and Governance Committee thinking when they decided to return to the old board leadership structure?" Nappier said in a written statement. "Before these positions were unbundled, the company had a beleaguered CEO and its performance struggled mightily. It's time to clean house and replace these directors with visionary board members who favor good governance practices, and who are truly committed to serving in the best interest of the company and its shareholders."

She called the plan to allow Iger to hold both positions "a regressive policy that could impair the board's role to oversee executive management on behalf of shareholders."

And she warned, "We are still recovering from the unprecedented market meltdown in 2009, which was fueled in part by some corporate boards that failed to effectively manage risk. For many of these boards, a CEO/Chair structure was in place, and unfettered greed on the part of executive management trumped the general interests of shareholders."

Disney shareholders are voting by proxy now. The vote will be announced at Disney's annual meeting March 23 in Kansas City.

Nappier is calling for shareholders to remove Judith L. Estrin, Aylwin B. Lewis, Robert W. Matschullat and Sheryl K. Sandberg from the board and the committee that oversees its corporate governance policies.