updated 1/6/2005 3:43:18 PM ET 2005-01-06T20:43:18

The board of The Walt Disney Co. has amended its corporate governance guidelines to officially separate the offices of chairman and chief executive, a move hailed by corporate governance advocates who pushed for the change.

The decision was announced Thursday and followed discussions with several shareholders, most notably Connecticut State Treasurer Denise Nappier, who had submitted a shareholder proposal to force the board to split the roles.

In light of the board's action, Nappier said she had withdrawn her proposal.

"This represents a significant victory for Disney shareholders and corporate governance advocates, and is certainly in the best interest of the company," Nappier said in a statement.

Nappier had submitted the proposal on behalf of the state's pension fund.

Disney's board first split the roles last year after shareholders delivered a stinging vote of no confidence in then Chairman and Chief Executive Michael Eisner.

Shareholders withheld 45 percent of their votes for his re-election to the board, a move that prompted the board to strip him of his chairmanship.

Former U.S. Sen. George Mitchell was named chairman. He had been serving as the board's independent lead director, charged with holding several meetings of Disney's independent directors each year.

On Thursday, Mitchell said the decision to formalize the splitting of the roles "embraces principles of good corporate governance that the company is committed to pursuing."

The new guideline states that the board chairman shall be an independent director "unless the board concludes that the best interests of shareholders would otherwise be better served."

In the event that the board decided to recombine the roles, the company said it would name an independent lead director who would hold separate meetings of the independent directors. Disney also said it would provide shareholders with a written explanation of any decision to recombine the roles.

Disney is searching for a replacement for Eisner, who has said he will step down when his contract expires in 2006. The board has hired an executive search firm and has said it will name Eisner's successor by June.

In trading Thursday afternoon, Disney shares rose up 31 cents, or 1.1 percent, to $27.71 on the New York Stock Exchange. The stock has traded in a 52-week range of $20.88 to $28.41.

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