Disney to Meet With Pensions

Calpers leads a group of six institutional investors seeking accountability from Chairman George Mitchell.
Publish date:

Updated from March 22

There are more fireworks in the Magic Kingdom.

Six big institutional investors told the embattled


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board late Monday that they want a meeting now to discuss where the media giant is headed.

The investors -- the heads of the New York State Common Retirement Fund, the Connecticut Retirement Plans and Trust Funds, the California State Teachers' Retirement System, the Ohio Public Employees Retirement System, the North Carolina Retirement Systems and the California Public Employees' Retirement System -- told new Chairman George Mitchell that they want to discuss "the performance and future of the company."

"We remain deeply concerned that our investments and the future of thiscompany are in jeopardy," the letter from the big state investors says. "The company has lost more than 20 percent in stock value over the last five years -- nearly five times more than the losses incurred by the S&P 500 index for the comparable period. In our view, such a meeting would send a necessary signal to the market place that the Disney Board is willing to engage in a constructive dialogue regarding our mutual interests as fiduciaries and shareownerrepresentatives."

The letter-writers collectively hold 33.7 million shares of Disney's stock, or less than 2% of the company's outstanding stock, according to a Calpers spokesman.

Disney subsequently released a letter from new chairman Mitchell saying Disney's board "will, of course, be pleased to arrange a meeting" with the letter-writers. Mitchell also indicated that he and fellow board member Judy Estrin had already expressed, to representatives of some of the pension funds, a willingness to hold such a meeting.

"We look forward to hearing your questions and to sharing with you details on the performance of The Walt Disney Company," wrote Mitchell "We remain confident in the company's strategic positioning and future growth potential."

The letter comes on the heels of an eventful stretch in which Burbank, Calif.-based Disney has received a hostile offer from cable titan


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and stripped longtime CEO Michael Eisner of his chairmanship of the company's board. For now, Disney seems to have beaten back the Comcast bid with promises to boost returns and improve operating performance. But it's becoming increasingly clear that Eisner's stewardship remains a sore point with many shareholders.

Monday's events show that the fallout of Disney's shareholder meeting early this month is still being felt. A staggering 43% of shareholders, including the six pension funds writing Monday's letter, withheld their support for Eisner's re-election to the board. The company sought to placate shareholder unrest by naming Mitchell -- who had garnered 24% nonsupport -- to replace him as chairman. But critics of the company's performance and governance continue to be heard.

Roy Disney and Stanley Gold, the disgruntled former Disney directors who spearheaded an anti-Eisner campaign, have said they aren't satisfied by Eisner's exit from the chairman post, and hope to have him out of the CEO office as well.

The letter-writers made it clear that they wanted to meet with the full Disney board to discuss their concerns, not a few representative board members. "It's a dire situation with the company," explained the Calpers spokesman. "I think they need to take time to do that, and be accountable to their shareholders."

Shares in Disney fell 49 cents to $24.90 Monday.