Union: No more do-overs for Disney…

December 17, 2010

Disney’s annual meeting this coming spring probably won’t be the happiest place on earth, but it sure could be interesting. UNITE HERE, the big service union that started in the needle and hospitality trades, fired a warning shot across the company’s bow yesterday with two shareholder proposals in Disney’s preliminary proxy:

1. That the Board of Directors seek shareholder approval of severance agreements with senior executives that contain a tax gross-up provision.

2. That the Company only use one test to assess performance in determining eligibility for awards of stock in the Long Term Incentive Plan for senior executives.

While we’ve been seeing a fair number of companies toning down or eliminating tax gross-ups, they’re still alive and well out there, and make a good tilting ground for unions and other activists. We’re more interested in the incentive-plan proposal, since do-overs strike us as something that belong more in the schoolyard than in the board-room.

UNITE’s beef is that the company has, in the past, adjusted the performance measures in its executive incentive plans, including a 2009 change that created three successive tests to determine whether bonuses would be paid out. That presumably makes this easier — if one test fails, the others could still come through. UNITE also takes a swipe at Fred Langhammer, Disney’s compensation chairman until November 2008, for having sat on AIG’s compensation and finance committees.

But the union isn’t just taking on Disney in the normally staid world of SEC filings. They’re also staging protests, including one earlier this week outside an event to promote Toy Story 3. And they’ve also launched a website whose aim is to dissuade members of the Academy of Arts and Sciences from giving an Oscar for the movie.

Time will tell whether UNITE’s efforts on multiple fronts turn out to be a “little black rain cloud” (a la Winnie the Pooh) or a more serious storm front on the horizon.

Image source: bubble_gum via flickr

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