Originally created 02/28/04

More large pension funds line up against Disney's Eisner

LOS ANGELES -- Michael Eisner is feeling the heat.

The embattled CEO of The Walt Disney Co. flew to Ohio Thursday to convince officials of five public pension funds that they should vote for his re-election to the company board.

Funds in California, New York, Connecticut, Massachusetts and New Jersey control nearly 30 million Disney shares already have stated they will withhold their votes - the equivalent of a "no" vote.

Eisner's re-election isn't in doubt because he is running unopposed and many large mutual funds and other institutional shareholders are likely to vote for him.

But a large protest vote at the March 3 annual shareholders meeting in Philadelphia would be unsettling for Eisner, whom critics blame for a long slump in Disney profits.

Ex-board directors Roy E. Disney and Stanley Gold have waged a three-month campaign against Eisner and three other Disney directors.

As a sign of how seriously the company is taking the votes, Eisner and Robert Matschullat, chairman of Disney's audit committee, flew to Columbus, Ohio, Thursday to meet officials from five state pension funds that will decide by Monday whether to support him.

The state's main retirement fund controls 4.6 million Disney shares.

Disney issued a statement Thursday repeating earlier estimates of double-digit earnings growth through 2007 and 30 percent growth this year.

"Disney's record of building value is indisputable and it is a well-managed company with world-class governance and a laser-focus on building shareholder value," the statement read.

The scurrying came on the same day that New York State Comptroller Alan Hevesi said the nation's second-largest pension fund was withholding support for Eisner.

"Under Michael Eisner's management, Disney has not performed well over the last several years," Hevesi said in a statement. "His tight control over Disney's decision making and his role as CEO and chairman of the board call into question his commitment to corporate governance reforms."

The New York State Common Retirement Fund controls about 8.7 million Disney shares worth about $225 million.

The state of Connecticut, which controls 534,000 shares, also announced it was withholding its support.

On Wednesday, the California State Teachers Retirement System, which controls about 7.97 million Disney shares, made its own announcement, citing concerns about board leadership that has led to a five-year annualized return of minus 5.29 percent, spokeswoman Sherry Reser said.

The California Public Employees' Retirement System - the nation's largest pension fund - also said Wednesday it was withholding its 9.9 million votes from Eisner and three members of the board's audit committee.


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