New York State Comptroller Alan Hevesi and five major pension investors in Walt Disney say they didn’t pull any punches in their gang-up on Disney’s board yesterday about replacing CEO Michael Eisner.
Eisner, the long-time Disney chief now under fire from investors, didn’t attend the special session aimed at easing tensions with major shareholders.
Hevesi has been at the forefront of public pension fund unrest over Eisner’s tenure and the lack of independent directors on Disney’s board.
“There was no pulling of punches,” Hevesi said, following the closed meeting at the W. 66th St. headquarters of Disney’s ABC network.
One big fund boss, Sean Harrigan, head of the California Public Employees’ Retirement Sysem, said the pension investors “told the Disney board they had no confidecne in Mr. Eisner [and yesterday’s sit-down] was an imporant second step for us.”
“Now the ball is in Disney’s court,” Harrigan said.
Hevesi and the five pension chiefs holding 2 percent of Disney’s outstanding shares had their face-to-face for more than an hour with key figures of the Disney board, including Disney President Bob Iger, and five independent directors, as well as CFO Tom Staggs.
Both sides called the session “frank” and said there were no tense moments.
“We got all our concerns out in the open and on the table,” one pension fund source said. Other pensions funds included those from Connecticut, North Carolina and Ohio.
At his press conference, Hevesi said the funds and the Disney representatives “agreed in principle” to allow the funds to put up nominees for independent directors in the future.
Hevesi said he didn’t have a pool of candidates or short list of names he could discuss, but that the Disney people and the fund managers would first develop a “due diligence process” to nominate them.
“We recommended to them that the independence of the board can be enhanced by their accepting nominees,” Hevesi said.
“They have agreed in principle to take recommendations from us. We will submit names to them of prospective directors.”
Disney’s board chairman George Mitchell told a news conference that the meeting was “cordial, civil, frank, thorough.”
“They expressed their views without any restraint, so far as I could see. We expressed our views without any restraint,” he said.
The Disney board has been under assault from pension funds and former directors Roy Disney and Stanley Gold, who mounted a well publicized shareholder revolt against Eisner during the past year.
The campaign resulted in 45 percent of shareholders withholding their votes for Eisner at the March annual meeting, causing Eisner to give up his post as chairman.
Pension managers also want Disney’s board to set up a clearer succession plan when Eisner, 62, steps down.
Disney independent directors Judith Estrin, Monica Lozano, Robert Matschullat and Aylwin Lewis also attended the session, the company said.
Lozano told reporters that Disney hired Charles Trivet of Russell Reynolds Associates to help search for a new director.