Eisner's Re-election Opposed by Five More Pension Funds

01 March 2004

Walt Disney Company chairman/ceo Michael Eisner is due for a rocky ride at the lackluster group's March 3 shareholders meeting in Philadelphia.

In the footsteps of Calpers (California Public Employees’ Retirement System), two more state pension funds -- New York State Common Fund (with a holding worth $118 billion (€95.02bn; £63.82bn) and the Connecticut State Treasury ($20bn) -- revealed Friday they will support a motion of no confidence in the Disney boss.

The pension funds of North Carolina, Massachusetts and New Jersey have also joined the protest lobby and will vote in concert with their sibling states. At the same time shareholder advisory firm Glass Lewis & Co, whose clients own over 15% of Disney stock, has recommended them to abstain from voting for Eisner.

But embattled though Eisner may be, he is standing unopposed and a 'no confidence' motion even if carried will not impede his re-election. It would, however, send an unambiguous signal to Disney's docile board that shareholders want to see a new derrière on the plush upholstery of the Disney chair.

Ovitz Payoff Correspondence Adds More Embarrassment for Eisner

Meantime, adding to the mouse monocrat's rapidly reddening complexion is last week's publication of his correspondence with former friend and quondam Hollywood agent Michael Ovitz, whom Eisner appointed as Disney president back in 1995 -- only to end seventeen months later in a $138m (no, you don't need an eye test!) payoff debacle.

The epistolatory saga passed into the public domain courtesy of a class-action lawsuit brought on behalf of Disney shareholders by Glass Lewis. This charges that Eisner put friendship over his duty to the company and challenges a severance package that gifted Ovitz with $38 million in cash plus shares valued at around $100 million.

Among the correspondence is a handwritten memo from Eisner dated October 9 1996: "I am committed to make this a win-win situation, to keep our friendship intact, to be positive, to say and write only glowing things."

But Eisner's saintly resolve had evidently evaporated by November 11, when he wrote a lengthy screed telling his pal he would have to quit Disney, citing a list of Ovitz's transgressions, including expecting the company to pay for his daughter's Bat Mitzvah.

In another letter to Ovitz: "I was wondering what it would cost [Disney] in dollars and embarrassment to end our corporate partnership right away?" This uncertainly was resolved a month later when Ovitz resigned with a golden goodbye of such proportions it required assistance from Wells Fargo.

"In our minds, Mr Eisner is responsible for the Ovitz fiasco that once drained substantial sums from the company's coffers and threatens to do so again, with the pending lawsuit," Glass Lewis wrote in its report.

Data sourced from: Times Online (UK) and Associated Press; additional content by WARC staff