UPDATE 2-Disney investors reject say-on-pay; quiz on China

* "Say on pay" proposal wins just 39 pct support

* Director Steve Jobs did not appear (Adds details on voting, analysts' comment)

OAKLAND, Calif., March 10 - Walt Disney Co <DIS.N> shareholders rejected a proposal that would have given them say on executive pay packages.

Investors at Disney's annual meeting grilled Chief Executive Officer Bob Iger on issues ranging from a long-touted plan to bring its signature Disneyland theme park to China to the company's acquisition plans.

Analysts say shareholders may have rejected the pay proposal partly for fear of rocking the boat. Disney management had called it "too blunt an instrument" for dealing with complex executive compensation.

Instead, investors granted management leeway to expand the number of shares that can be granted to a single person.

"I don't think Disney's problems have anything to do with the management team," argued Caris & Co analyst David Miller.

Investors may be thinking "What if the vote goes through and Bob Iger and Tom Staggs throw up their hands and say forget it?" Miller said. "The last thing Disney or any other company that has seen its share price drop 50 percent or more needs is turmoil in management."

Disney shares jumped 6.5 percent on Tuesday, as the broader market <.DJI> rallied 6 percent.

Multinational corporations from Intel <INTC.O> to Hewlett Packard <HPQ.N> have broached the possibility of so-called say-on-pay initiatives that give investors a chance to influence executive packages, amid growing calls from Kazakhstan to Great Britain for remuneration curbs. [ID:nL4278068]

Corporate governance experts say such measures help shore up investor trust and increase shareholder participation. But other business analysts argue such structures benefit activist shareholders who may not have the corporation's best interests at heart.

At Disney's annual meeting on Tuesday in Oakland -- chosen because of its proximity to prized asset Pixar -- shareholders gave their blessing to two company-sponsored amendments to its executive compensation plans. The amendments allow Disney to increase the number of shares available for granting to a single person.

SLOW BOAT TO CHINA

Shareholders also re-elected the company's 12 directors by a wide margin.

Apple <AAPL.O> chief executive and Disney director and shareholder Steve Jobs, now taking a six-month medical leave of absence, was not present at Tuesday's gathering, despite widespread Internet reports he had made his first public appearance since announcing his hiatus.

Shareholders quizzed Iger about his plans for a theme park in Shanghai. Disney has signed a framework agreement with local government to kick off such a project, and said in January it intended to submit a proper plan for the park. [ID:nN09309290]

The firm now runs a theme park in Hong Kong that has been criticised for yielding meager returns.

"To the extent that the Chinese government will continue to work on it with us, we will continue to pursue it," Iger said.

Another issue that shareholders focused on was job cuts. Iger told them that about 50 people at the firm's Florida park had accepted voluntary buyouts thus far.

Disney said in January it sent voluntary buyout offers to 600 executives at its domestic theme park operations. [ID:nN21494028]

Investors also voted down a proposal that would have barred the entertainment company from providing death benefits to the families of executives who die on the job.

The shareholder-sponsored "say on pay" proposal received 39 percent of shares cast at the meeting, and the "golden coffin" proposal on death benefits garnered 27 percent.

Directors were re-elected with 90 percent support from shares voted at the meeting, and the compensation plan amendments received 94 percent.

About 84 percent of the common shares available for voting were cast at the meeting in Oakland.