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Updated from 1:47 p.m.


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directors met with representatives of seven public pension funds and continued to insist that things are on the right track.

The pension fund officials in attendance reported that they suggested Disney expand its succession planning efforts to the board leadership as well as management, and they asked the board to formalize a mechanism for getting input from shareholders. Both those ideas, they indicated, received a tentatively positive reception from the Disney board members in attendance.

"I think the dialog today was good," said Sean Harrigan, chairman of the California Public Employees' Retirement System, at a postmeeting press conference. "Now we will wait to see how Disney responds."

The meeting, which took place in New York City on Friday, is the latest outgrowth of the shareholder revolt that crystallized at the company's annual meeting in early March. That event, held in Philadelphia, saw an unprecedented campaign against then-chairman and CEO, Michael Eisner, culminate with Eisner losing his chairmanship.

Amid criticism of Eisner's management, and of the board of directors that has supported him right throughout, Disney directors said once again Friday that governance was sound, that Disney management was building value, and that the board was being responsive to shareholders' concerns.

"The Disney Board takes seriously the responsibility to listen to all shareholders. This meeting was part of that process," said George Mitchell, who replaced Eisner as board chairman, in a statement issued after Friday's get-together.

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"Today's meeting included a thorough exchange of views and ideas," Mitchell said. "The Board members continue to respect and understand the specific issues raised by this group. We hope these leaders now have a better understanding as to why the Board remains firm in its view that the Disney management team ... is executing against its strategic plan in order to continue to drive long-term shareholder value, as evidenced by the most recent earnings report, and to strengthen the company's position as the global leader in quality family entertainment."

Among the subjects covered in the meeting, according to Disney, were executive succession planning, the separate roles played by chairman Mitchell and CEO Eisner, and the selection process for a new independent director, which the board hopes to appoint by the end of the year.

Board members also "solicited detailed input regarding specific performance and governance initiatives," said Disney.

Among other topics under discussion, the pension fund representatives reported that they talked at the meeting about a formalized structure under which shareholders -- it wasn't clear exactly which ones -- would be able to communicate with the board about their concerns on a regular basis. They indicated that they will return to the board with a detailed proposal on this front.

Additionally, the public fund representatives said that Connecticut Treasurer Denise Nappier had suggested the board go beyond succession planning for Eisner and other top executives to plan for a successor to board Chairman Mitchell. "The chairman did respond very favorably," Nappier reported.

The board will take suggestions from the pension fund group for possible candidates for the board seat, the group said; in fact, the group says it may be appropriate for Disney to add another independent director in addition to the seat it plans to fill.

Eisner, the target of much shareholder wrath, didn't attend the meeting. The six board members who did attend included Mitchell, independent directors chairing the board's compensation, governance-and-nominating, and audit committees, and Disney President Bob Iger. Disney CFO presented financial information as well, the company said.

Among the other pension fund representatives who attended the Disney meeting were New York State Comptroller Alan Hevesi, North Carolina Treasurer Richard Moore, and California State Teachers' Retirement System CEO Jack Ehnes.

The pension funds represented by the assembled officials collectively hold 39.9 million shares of Disney stock, according to the company, or 2% of outstanding shares.

Disney shares rose 11 cents Friday to trade at $23.16.