Risk & Compliance

More Calls for Withholding Disney Votes

Calpers and Glass, Lewis add their voices to the anti-Eisner parade.
Stephen TaubFebruary 27, 2004

Glass, Lewis, an independent shareholder adviser, and Calpers, the largest public pension fund, have urged investors to oppose the reelection of Michael Eisner to the Walt Disney Co. board of directors.

Calpers cited the company’s “dismal performance for the last five year period” and its lack of confidence in the long-term strategic vision of the company. Glass, Lewis stated that “the Disney board has been notoriously insular, famously gullible and blindly loyal to Mr. Eisner,” according to Reuters.

Glass, Lewis reportedly recommended that, in protest, investors withhold their proxy votes for Eisner and two other directors, former U.S. senator George Mitchell and former chief financial officer Gary Wilson. Calpers also intends to withhold votes for the three board members on Disney’s audit committee because it had authorized the auditor to perform an unquantifiable amount of non-audit services, such as tax examination assistance and other services regarding internal controls.

The announcements come two weeks after Institutional Shareholder Services, the largest proxy adviser, recommended that shareholders withhold their votes from Eisner. ISS cited governance issues and Disney’s refusal to split the roles of chairman and chief executive — positions both now held by Eisner.

And, of course, they join dissident shareholders and former Disney directors Roy Disney and Stanley Gold, who instigated their own campaign to oust Eisner. “We are obviously pleased and gratified with the ‘vote no’ momentum that is building as we head toward the March 3 Disney annual meeting in Philadelphia,” said the two former directors, in a statement.

Disney spokeswoman Zenia Mucha said in a statement that the company’s audit process was “beyond reproach” and that she was “dismayed” by Calpers’ criticism that Disney had allowed its auditor to perform consulting work, according to Reuters.

Six of the 11 Disney board members up for election are opposed by at least one of the proxy advisers and Calpers. The five board members supported by both the advisers and Calpers, according to Reuters, are chief operating officer Bob Iger; two new directors, Sybase chief executive John Chen and Yum Brands president Aylwin Lewis, and two returning directors, John Bryson and Judith Estrin.

Bryson and Estrin are opposed by Roy Disney and Gold.