Walt Disney Company (DIS)

cate of Incorporation that require approval of the vote of more than a majority of outstanding shares. There are two such provisions, one relating to business combinations with “Interested Persons” and the other (discussed in the following section) relating to amendment of the Bylaws.

Article VII of the Restated Certificate of Incorporation requires a vote of four-fifths of the outstanding shares to approve any business combination with any person (an “Interested Person”) who beneficially owns more than 5% of any class of voting securities of the Company at the time of the transaction unless (a) the transaction is approved by the Board of Directors and (b) a majority of the members of the Board were members of the Board before the person acquired more than 5% of the Company’s shares. The provision defines a business combination to include a merger, sale of all or substantially all of the Company’s assets, purchase of all or substantially all of the assets of another entity and any other transaction that requires the approval of shareholders under the Delaware General Corporation Law. The provision defines an Interested Person to include a person, firm or corporation, or any group acting or intending to act in concert, including persons who are directly or indirectly controlling or controlled by one another or are under direct or indirect common control. Article VIII of the Restated Certificate of Incorporation requires a vote of four-fifths of outstanding shares to amend Article VII.

These provisions are designed to protect minority shareholders in an instance in which a party seeks to acquire the Company or its assets through the open market accumulation of shares. In such an instance, the interests of the Interested Person may diverge from the interests of other shareholders because the acquirer seeks to complete the takeover either without an appropriate premium or by wielding substantial (and self-interested) influence over the outcome of any required shareholder vote. These provisions ensure that the interests of all shareholders are adequately represented either through the super-majority requirement or through the requirement of

approval by the Board of Directors, pursuant to which the Board would exercise its fiduciary duties to make a judgment that takes into account the interests of all shareholders.

The Board of Directors is proposing to change the shareholder vote required to approve business combination transactions with an interested person from four-fifths to two-thirds of outstanding shares. The proposed two-thirds vote requirement mirrors Section 203 of the Delaware General Corporation Law, which (unless shareholders approve a provision of the Certificate of Incorporation or Bylaws expressly electing not to be covered by this section) prohibits certain transactions with “interested stockholders” unless the transaction is approved by a vote of two-thirds of outstanding shares or meets other exceptions. The Board of Directors believes that, taking into account evolving governance practices, the voting standard used in the Delaware General Corporation Law, combined with the other provisions of Article VII of the Restated Certificate of Incorporation, provides the right balance for achieving appropriate protection of shareholder interests. For similar reasons, the Board believes that it is appropriate to reduce to two-thirds of shares outstanding the vote required in Article VIII to approve an amendment to Article VII. As currently drafted, a vote of eighty percent of outstanding shares is needed to amend that Article. The Board therefore recommends that Article VII and VIII of the Restated Certificate be amended to read as set forth in Annex A.

Following this amendment, our Restated Certificate of Incorporation will continue to require supermajority shareholder approval at a reduced level for business combination transactions with Interested Persons if the Board does not approve the transaction (or if the Board does not contain a majority of members elected before the Interested Person became an Interested Person), and the Company will remain subject to the anti-takeover provisions of the Delaware General Corporation Law. These provisions of our Certificate of Incorporation and of Delaware Law could have the effect of delaying or preventing a

change of control in some circumstances. In addition, the Restated Certificate of Incorporation contains a provision regulating the ability of shareholders to bring matters for action before annual and special meetings and authorizes the Board of Directors to issue and set the terms of preferred stock. The regulations on shareholder action could make it more difficult for any person seeking to acquire control of the Company to obtain shareholder approval of actions that would support this effort. The issuance of preferred stock could effectively dilute the interests of any person seeking control or otherwise make it more difficult to obtain control.

The affirmative vote of four-fifths of the number of shares of common stock outstanding on the record date for the Annual Meeting will be required for approval of this proposal. Abstentions will have the effect of a negative vote on this proposal. Broker non-votes (as described under “Information About Voting and the Meeting — Voting”) will not be considered entitled to vote on this proposal and will have the effect of a negative vote on this proposal.