Leaders of six large state pension funds called their meeting Friday with Walt Disney Co. board members "fruitful," but stressed that the dialogue would have to be followed by actions that show the board’s independence and commitment to improving the company’s performance.
"They did an outstanding job today of saying all the right things and quite honestly I’m not surprised at that," North Carolina State Treasurer Richard Moore said at the end of the 2.5 hour meeting in New York.
"What needs to happen in the future is that some of the talk is backed up by appropriate action."
The pension fund leaders called on Disney to create a permanent ad hoc committee to make discussions with large investors more formal and asked that all future executive compensation agreements be sent to investors for comment 30 days before being adopted — steps that go far beyond any current corporate governance standards.
Disney board Chairman George Mitchell said he and the other five directors who attended Friday’s meeting would consider all the suggestions.
Disney chief executive Michael Eisner did not attend the meeting. Disney President Robert Iger, who is also a board member did attend. Chief Financial Officer Thomas Staggs made a presentation on the company’s finances.
Serious succession planning
Mitchell said the board is taking succession planning seriously and is considering candidates for chief executive and the next 10 top positions in the company.
He said the planning includes all contingencies, including the sudden death or disability of an executive or a vacancy "created by an executive leaving voluntarily or by the board creating a vacancy."
Mitchell called the discussion, which was requested by the state pension funds, "cordial, civil, frank, and thorough." But he emphasized that the funds represent less than 2 percent of outstanding shares and that the board has been meeting with other shareholders who, in some cases, have expressed opposite views from those expressed Friday.
"We are trying extremely hard to listen to everybody’s views," Mitchell said. "We simply want them to understand that they don’t speak for all shareholders. Our task is to sort through all those views and make the judgments we think are in the best interests of the shareholders."
The pension funds stopped short of asking for the immediate resignation of Eisner. But they made it clear they expected Disney’s board to seriously consider whether Eisner is the best person to lead the company going forward.
"We didn’t sit at that meeting and ask ’Are you firing Eisner today, next week or some time certain?"’ New York State Treasurer Alan Hevesi said.
"There are some serious problems with regard to his leadership," said Sean Harrigan, president of the California Public Employees Retirement System, the nation’s largest public employees pension fund.
"What happened on March 3 was that the focus changed from Michael Eisner to the board. It’s the board’s responsibility to decide whether they will go through a search and selection process to replace Michael Eisner."
At Disney’s March 3 annual shareholders meeting, investors withheld 45 percent of the votes cast from Eisner’s re-election to the board. The effort to withhold support from Eisner was led by several state pension funds that have expressed disgust with the performance of the company over the past seven years.
Connecticut State Treasurer Denise Nappier said Friday’s meeting was a welcome contrast to a shareholders meeting she spoke at several years earlier.
"The room was dark and I could not see the board members," Nappier said of the 2002 shareholders meeting held in Hartford, Conn. "Today there was light."