Updated from 1 p.m.

Four big public investors want a bigger say in who's running

Disney

(DIS) - Get Report

.

The group -- led by the nation's largest public pension fund, the California Public Employees Retirement System, or Calpers -- filed Tuesday with the

Securities and Exchange Commission

to propose a measure giving Disney shareholders the standing right to directly elect directors.

The proposal would allow shareholders to nominate up to two people to Disney's 11-member board and have those names included on the company's proxy. The group said that if shareholders approve the measure with a majority of votes at next year's annual meeting, they "could be able to nominate" two directors at the 2006 meeting.

Under the current arrangement, investors who want to nominate an alternative slate of directors must go through the costly and involved process of mailing their own proxy materials.

"We have agreed to co-sponsor this resolution to use in the event the Disney Board doesn't satisfy our concerns about independent directors," Calpers President Sean Harrigan said.

"As with all shareholder proposals we receive each year, we will review this proposal and respond accordingly," Disney said Tuesday afternoon.

Calpers was joined in the resolution by the New York State Common Retirement Fund, the AFSCME Employees Pension Plan and the Illinois State Board of Investment. The funds together own 18 million of Disney's 2 billion outstanding shares.

The news comes as Disney continues to face questions about its corporate governance in the wake of a tumultuous year. Disney Chief Michael Eisner was stripped of his chairmanship in March after a no-confidence vote from investors at the 2004 annual meeting in Philadelphia. The company named George Mitchell to take his place leading the board.

The uprising came as Disney successfully deflected an unsolicited takeover bid from cable giant

Comcast

(CMCSA) - Get Report

. Critics of Eisner's leadership pointed out the poor performance of Disney stock in recent years, but the company responded by promising improving performance this year and beyond.

Then, last month, Eisner surprised Wall Street by laying out plans to step down when his contract expires in 2006. The company took his comments a step further by beginning a search for a successor.

Questions about the board's independence have re-entered the spotlight because of a lawsuit over the board's conduct regarding the employment of Michael Ovitz. Ovitz was briefly the company's No. 2 executive in the late 1990s. The suit claims the directors failed to exercise adequate control over Eisner, who brought the former Hollywood bigwig on board before quickly agreeing to allow him to depart with a multimillion-dollar golden parachute.

On Tuesday, Disney fell 26 cents to $24.64.