May 21 (Bloomberg) -- Walt Disney Co. Chairman George Mitchell and company directors agreed to consider recommendations from pension funds for naming potential new independent directors, New York State Comptroller Alan Hevesi said.
Mitchell, Chief Financial Officer Thomas Staggs and five directors met in New York with officials from seven pension funds who are concerned about Disney's performance and corporate governance, including succession planning.
``We recommended to them that the independence of the board can be enhanced by their accepting nominees,'' Hevesi told reporters at a press conference after the meeting. ``They have agreed in principle to take recommendations from us. We will submit names to them of prospective directors.''
The funds and former directors Roy Disney and Stanley Gold have said the board isn't independent enough from Eisner, 62, and that shares prices have stagnated. The chief executive officer shed the title of chairman after he failed to win the support of 45 percent of the votes cast at the March annual meeting following the dissidents' campaign.
Eisner has defended himself and the current Disney management by pointing to higher profit in the last two quarters to bolster his case against Roy Disney, Gold, and pension funds that called for his resignation.
Eisner yesterday in an interview repeated the company's forecast of a 50 percent increase in 2004 per-share profit. He didn't attend today's meeting.
Leverage
Shares of Disney rose 3 cents to $23.01 at 3:40 p.m. in New York Stock Exchange composite trading. They had risen 29 percent in the past 12 months through yesterday. The stock peaked at $43.63 in April 2000.
Roy Disney, 74, nephew of founder Walt Disney, and Gold, 61, have said the rising profit at Disney is only a rebound from low levels. They continue to campaign to oust Eisner, the longest- serving CEO among companies in the Dow Jones Industrial Average.
``I don't see how the states can force anything to happen now,'' Vic Hawley, a fund manager at Los Angeles-based Reed Conner & Birdwell Inc., which owns 1.4 million Disney shares, said before the announcement. ``There's not a contentious board, there's not a shareholder vote. What's the next event?''
Hevesi and fund managers from states including New York, California, North Carolina, Ohio and Connecticut had planned to attend the meeting.
Disney directors Judith Estrin, Monica Lozano, Robert Matschullat, Aylwin Lewis and Disney President Robert Iger also attended, the company said in a release.
`Cordial, Civil, Frank'
The ``tone of the meeting was cordial, civil, frank, thorough,'' Mitchell said at a press conference after the meeting. ``They expressed their views without any restraint, so far as I could see. We expressed our views without any restraint.''
Hevesi said the funds' plan to submit names of potential board members isn't complete.
``We have of coterie of names, but we haven't gotten there yet -- who we want to recommend or whether they're interested,'' Hevesi said in an interview after the meeting.
Disney hired Charles Tribbett of Russell Reynolds Associates to help search for a new director, Lozano told reporters.
``The board has identified qualities and characteristics of the next director we would like to be considered,'' Lozano said. ``We would hope that we would have a new independent director in place before year-end.''
Discussions
Disney directors discussed short- and long-term financial performance and trends, and reviewed the company's corporate governance guidelines with the funds, Disney said in a statement.
``This board has discussed succession for many years,'' Mitchell told reporters after the meeting. The plan includes the roles of the CEO and the top 10 positions under the chief executive.
The board told the funds it will continue to hold management accountable for Disney's performance and expects continued growth in earnings, cash flow and the return on invested capital, Disney said in the statement.
``The meeting itself was a positive step,'' Hevesi said at the press conference. ``There was no pulling of punches.''
The state pension funds, with combined assets of more than $500 billion, hold 39.9 million Disney shares, about 2 percent of Disney's shares outstanding.
Disney last week said fiscal second-quarter profit jumped 71 percent to $537 million, or 26 cents a share, from $314 million, or 15 cents, a year earlier.
Disney's quarterly results were hurt by higher costs and writedowns from films ``The Alamo'' and the animated film ``Home on the Range.''
Time Warner Inc. is the biggest media company.
Mitchell, Chief Financial Officer Thomas Staggs and five directors met in New York with officials from seven pension funds who are concerned about Disney's performance and corporate governance, including succession planning.
``We recommended to them that the independence of the board can be enhanced by their accepting nominees,'' Hevesi told reporters at a press conference after the meeting. ``They have agreed in principle to take recommendations from us. We will submit names to them of prospective directors.''
The funds and former directors Roy Disney and Stanley Gold have said the board isn't independent enough from Eisner, 62, and that shares prices have stagnated. The chief executive officer shed the title of chairman after he failed to win the support of 45 percent of the votes cast at the March annual meeting following the dissidents' campaign.
Eisner has defended himself and the current Disney management by pointing to higher profit in the last two quarters to bolster his case against Roy Disney, Gold, and pension funds that called for his resignation.
Eisner yesterday in an interview repeated the company's forecast of a 50 percent increase in 2004 per-share profit. He didn't attend today's meeting.
Leverage
Shares of Disney rose 3 cents to $23.01 at 3:40 p.m. in New York Stock Exchange composite trading. They had risen 29 percent in the past 12 months through yesterday. The stock peaked at $43.63 in April 2000.
Roy Disney, 74, nephew of founder Walt Disney, and Gold, 61, have said the rising profit at Disney is only a rebound from low levels. They continue to campaign to oust Eisner, the longest- serving CEO among companies in the Dow Jones Industrial Average.
``I don't see how the states can force anything to happen now,'' Vic Hawley, a fund manager at Los Angeles-based Reed Conner & Birdwell Inc., which owns 1.4 million Disney shares, said before the announcement. ``There's not a contentious board, there's not a shareholder vote. What's the next event?''
Hevesi and fund managers from states including New York, California, North Carolina, Ohio and Connecticut had planned to attend the meeting.
Disney directors Judith Estrin, Monica Lozano, Robert Matschullat, Aylwin Lewis and Disney President Robert Iger also attended, the company said in a release.
`Cordial, Civil, Frank'
The ``tone of the meeting was cordial, civil, frank, thorough,'' Mitchell said at a press conference after the meeting. ``They expressed their views without any restraint, so far as I could see. We expressed our views without any restraint.''
Hevesi said the funds' plan to submit names of potential board members isn't complete.
``We have of coterie of names, but we haven't gotten there yet -- who we want to recommend or whether they're interested,'' Hevesi said in an interview after the meeting.
Disney hired Charles Tribbett of Russell Reynolds Associates to help search for a new director, Lozano told reporters.
``The board has identified qualities and characteristics of the next director we would like to be considered,'' Lozano said. ``We would hope that we would have a new independent director in place before year-end.''
Discussions
Disney directors discussed short- and long-term financial performance and trends, and reviewed the company's corporate governance guidelines with the funds, Disney said in a statement.
``This board has discussed succession for many years,'' Mitchell told reporters after the meeting. The plan includes the roles of the CEO and the top 10 positions under the chief executive.
The board told the funds it will continue to hold management accountable for Disney's performance and expects continued growth in earnings, cash flow and the return on invested capital, Disney said in the statement.
``The meeting itself was a positive step,'' Hevesi said at the press conference. ``There was no pulling of punches.''
The state pension funds, with combined assets of more than $500 billion, hold 39.9 million Disney shares, about 2 percent of Disney's shares outstanding.
Disney last week said fiscal second-quarter profit jumped 71 percent to $537 million, or 26 cents a share, from $314 million, or 15 cents, a year earlier.
Disney's quarterly results were hurt by higher costs and writedowns from films ``The Alamo'' and the animated film ``Home on the Range.''
Time Warner Inc. is the biggest media company.