Five state pension funds said Thursday that they would join a growing chorus of investors opposing Michael Eisner's reelection as chairman of Walt Disney Co., and New York's comptroller called for Eisner's immediate removal.
Faced with the mounting backlash, the entertainment giant is braced to see Eisner lose as much as 30% of the shareholder votes at Wednesday's annual meeting in Philadelphia, a source close to the company said.
Representatives of pension plans in New York, New Jer- sey, Connecticut, Massachusetts and Virginia said they had lost confidence in Eisner's leadership of the Burbank media giant. Despite a recent rebound, the company's earnings and stock price have changed little since the 1990s.
Alan Hevesi, New York's comptroller and trustee of the State Common Retirement Fund -- the country's second- largest pension fund in terms of assets -- said Disney's board of directors should "separate the positions of chairman and chief executive and replace Mr. Eisner as soon as possible."
The five funds' declaration comes one day after the country's largest pension fund -- the California Public Employees' Retirement System -- and the smaller California State Teachers' Retirement System fund said they planned to withhold their support for Eisner at the shareholder meeting.
Representatives of the five state funds said Thursday that they were particularly troubled by the dual roles Eisner holds as chairman and chief executive, a nexus of power that cor- porate governance activists have frowned upon in recent years.
Eisner's "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," Hevesi said.
But Hevesi and others said their concerns went beyond the issue of Eisner's joint roles.
"Eisner has created no value for shareholders for the past seven years," said Orin Kramer, chairman of the New Jersey State Investment Council.
Disney downplayed the significance of the funds' decisions, saying they were to be expected given that several follow the lead of Institutional Shareholder Services and Glass Lewis & Co.
The highly influential shareholder advisory firms, whose clients represent about 30% and 15%, respectively, of Disney's shareholder base, have announced their opposition to Eisner's reelection as chair- man.
