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4 Pension Funds Seek Disney Policy Change

October 13, 2004|From Reuters

Four of the largest U.S. public pension funds said Tuesday that they would ask Walt Disney Co. to change company policy to let investors nominate two independent directors to the board.

The move by the California Public Employees' Retirement System, the New York State Common Retirement Fund and two allies comes on the heels of the Disney board's announcement that its goal is to find a new chief executive to replace Michael Eisner by mid-2005, capping a yearlong fight over corporate governance at the company.

Eisner lost his role as chairman this year after holders of 45% of Disney shares withheld votes for his reelection to the board in a sign of protest.

Recently Eisner said he would step down as CEO when his contract ended in 2006, and the board responded that it would aim to find a new CEO by June 2005.

Eisner said his decision was not tied to the shareholder fight.

Under the proposal announced Tuesday, a group of shareholders with at least 5% of Disney shares held for two years could nominate two independent directors to the 11-member board. The candidates would be included on the company's official proxy ballot, a cost-effective and relatively accessible process compared with the alternative of waging a proxy fight and sending out separate ballots to all shareholders.

"As with all shareholder proposals we receive each year, we will review this accordingly," the company said in a statement.

The American Federation of State, County and Municipal Employees Pension Funds and the Illinois State Board of Investment also backed the latest proposal.

The four funds have less than 1% of Disney stock, but activist public pension funds have led the charge for corporate governance change at the media conglomerate, and many have repeatedly questioned the board's independence from management.

Currently Disney's board nominates new members and shareholders are asked each year to approve the slate.

A similar proposal to let disgruntled shareholders nominate directors that would apply to all companies is under consideration by the Securities and Exchange Commission.

Shares of Disney fell 6 cents Tuesday to $24.84 on the New York Stock Exchange.

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