[CrashPQ]

Mousketeer loses key investor votes

Wed Feb 25, 7:00 PM ET


MEREDITH AMDUR

NEW YORK (Variety) --- Disney chairman-CEO Michael Eisner's feet came closer to the fire Wednesday as two influential investor orgs joined the chorus of those seeking to oust him and several associates from the Mouse House board of directors.



Despite an aggressive charm campaign in recent weeks by Disney officers in the runup to next week's shareholders meeting in Philadelphia, influential U.S. pension fund group CalPERS (California Public Employees Retirement System) and investor advisory group Glass Lewis recommended Wednesday that shareholders withhold their proxy votes for Eisner at the March 3 meeting.

CalPERS, in particular, is considered highly influential and could inspire similar voting by other institutional investors.

Calling Disney's performance over the past five years "dismal," the U.S.' largest public pension fund group said it had "lost complete confidence in Mr. Eisner's strategic vision and leadership in creating shareholder value for the company." CalPERS, which controls 9.9 million Mouse shares, will withhold votes for Eisner plus three other members of the company's audit committee.

Fund noted that the 23% decline in value over the past five years was five times worse than the losses incurred by the S&P 500 in the same period.

"We believe shareholders should send the message loudly and strongly that it is time for Disney to get a more focused strategy that will improve shareholders' return on invested capital," said Sean Harrigan, president of the CalPERS board of administration.

CalPERS did commend some of Disney's efforts to improve corporate governance and said it will vote for other directors based on evidence that they have begun to develop the building blocks of what will be needed to hold management accountable in the future.

The CalPERS blow came as a second major shareholder advisory group, Glass Lewis, recommended that investors withhold votes on Eisner as well as directors George Mitchell and Gary Wilson.

Glass Lewis earlier this week held a conference call with investors and Disney officials during which the board implied that it had pre-instructed Eisner to reject a bid from Comcast. The San Francisco-based group's recommendation came one week after another independent advisory group, Independent Shareholders Services, also weighed in against Eisner.

The Glass Lewis report called the Mouse board insular, gullible and blindly loyal. Independent org noted concern over Eisner's "tremendous power over the operation of this board."

The statement buttresses the aggressive "vote no" campaign mounted by former board members Stanley Gold and Roy Disney, though the firm did not call for its shareholders to hold back votes for directors Judith Estrin and John Bryson.

Disney officials responded Wednesday, calling the Glass Lewis report "flawed and laced with one-sided allegations and opinions."

In a statement Wednesday, Disney and Gold said the Glass Lewis recommendations validated their belief that "significant change is needed at the Walt Disney Co."

Calpers said its vote neither endorses nor opposes the messages sent by the other dissident groups seeking reforms at Disney (namely, Gold and Disney).

The fund is the 29th largest single shareholder of Disney, with a stake valued at $235 million out of some $165 billion worth of total assets under management.

Copyright © 2003 Reed Business Information, a division of Reed Elsevier Inc. Variety is a registered trademark of Reed Elsevier Properties Inc. and used under license. All Rights Reserved.

[muchie]

Thanks for the report Crash it just keeps getting more interesting.

[Mickey Crazy]

Finally some of the stockholders are beginning to focus on the performance of the last five years. The trend started by Eisner's failed leadership is starting to show!

[Capt-N-Nemo]

The story continues.............

[netenyahoo]

I just saw that New York State's retirement group isn't backing Eisner either, so both CA and NY are against him. It'll be interesting to see if enough investors will vote no.

[CaptainTony]

Can we start the victory dance now?

If this many folks are seeing thru the veil, I have to think that the Emporer is packing his bags... but, alas, we shall have to wait and see...

My wonder now, though, is this - after all this, if the Emporer does skate by, does he change his mindset, or do we get more of the same?

And, with that said, if he gets ousted, how long before he turns up at Dreamworks, pillaging the ideas left on Disney's chalkboard? Anyone ready for "Pirates of the Pacific: The Curse of the Ebony Diamond"?

[BDANtheman29]

I noticed something interesting: the Disney Board Members recommended rejecting proposals for theme park safety reporting and pensions for workers in China. I smell blood in the water.

Brendan