LOS ANGELES (Reuters) - A group of major U.S. public pension funds that have harshly criticized Walt Disney Co. (NYSE
IS - news) asked the board on Monday for a meeting to launch a "constructive dialogue" about the entertainment company's performance and strategy.
In a letter in response to the funds, Disney Chairman George Mitchell said board members would "be pleased" to meet with representatives of the public pension funds, who were some of Chief Executive Michael Eisner's most outspoken critics in the aftermath of a contentious shareholder meeting early this month.
The call for a meeting, which came in a letter released by the California Public Employees Retirement System, marked a softer stance by at least one of the state pension systems.
"We have explicitly agreed to give the company some time to improve its performance and not to ask for Eisner to be replaced at this time," New York State Comptroller Alan Hevesi said in a statement. Hevesi had called last month for Eisner to be replaced as soon as possible.
Calpers spokesman Brad Pacheco said his fund still wanted Eisner to step aside but was ready to focus on the company's performance at the meeting, the time of which is yet to be set.
"We look forward to hearing your questions and to sharing with you details on the performance of The Walt Disney Co.," Mitchell wrote in response. "We remain confident in the company's strategic positioning and future growth potential."
The California and New York pension funds, the nation's two largest, will be joined in the meeting by the California State Teachers' Retirement System, the Ohio Public Employees Retirement System, and state treasurers Richard Moore of North Carolina and Denise Nappier of Connecticut.
The group collectively holds less than 2 percent of Disney stock but had been a major force rallying dissent in the run-up to the March 3 annual meeting, where 43 percent of shares were voted against Eisner's reelection to the board.
"We applaud the Disney board for its responsiveness to shareholders," California State Teachers' Retirement System Chief Executive Jack Ehnes said. "It's obvious the board got the message sent by shareholders."
The board's decision to keep Eisner as CEO and replace him as chairman with Mitchell was seen by many critics as an inadequate response, and dissidents Roy Disney and Stanley Gold have vowed to continue their fight to oust Eisner.
Disney executives and board members, meanwhile, have trumpeted their message that they are listening to shareholders and understand they must perform financially.
"We remain deeply concerned that our investments and the future of this company are in jeopardy," the pension funds said, citing a more than 20 percent drop in Disney's stock price over five years.
In response, Mitchell noted that Disney's market capitalization has grown from $2 billion to well over $60 billion under Eisner since 1984, while net income has gone from $98 million to more than $1.2 billion.
Mitchell also noted that Disney's stock price has risen nearly 45 percent in the last 12 months.
John Chartier, a spokesman for Hevesi, told Reuters that New York's opposition to Eisner's continued stewardship of Disney had softened.
"But that does not mean that this is it," he added. "We want to see that they have a good strategic plan in place."
Shares of Disney had closed off 49 cents, or 1.9 percent, at $24.90 on the New York Stock Exchange (news - web sites) before the funds' announcement.
IS - news) asked the board on Monday for a meeting to launch a "constructive dialogue" about the entertainment company's performance and strategy. In a letter in response to the funds, Disney Chairman George Mitchell said board members would "be pleased" to meet with representatives of the public pension funds, who were some of Chief Executive Michael Eisner's most outspoken critics in the aftermath of a contentious shareholder meeting early this month.
The call for a meeting, which came in a letter released by the California Public Employees Retirement System, marked a softer stance by at least one of the state pension systems.
"We have explicitly agreed to give the company some time to improve its performance and not to ask for Eisner to be replaced at this time," New York State Comptroller Alan Hevesi said in a statement. Hevesi had called last month for Eisner to be replaced as soon as possible.
Calpers spokesman Brad Pacheco said his fund still wanted Eisner to step aside but was ready to focus on the company's performance at the meeting, the time of which is yet to be set.
"We look forward to hearing your questions and to sharing with you details on the performance of The Walt Disney Co.," Mitchell wrote in response. "We remain confident in the company's strategic positioning and future growth potential."
The California and New York pension funds, the nation's two largest, will be joined in the meeting by the California State Teachers' Retirement System, the Ohio Public Employees Retirement System, and state treasurers Richard Moore of North Carolina and Denise Nappier of Connecticut.
The group collectively holds less than 2 percent of Disney stock but had been a major force rallying dissent in the run-up to the March 3 annual meeting, where 43 percent of shares were voted against Eisner's reelection to the board.
"We applaud the Disney board for its responsiveness to shareholders," California State Teachers' Retirement System Chief Executive Jack Ehnes said. "It's obvious the board got the message sent by shareholders."
The board's decision to keep Eisner as CEO and replace him as chairman with Mitchell was seen by many critics as an inadequate response, and dissidents Roy Disney and Stanley Gold have vowed to continue their fight to oust Eisner.
Disney executives and board members, meanwhile, have trumpeted their message that they are listening to shareholders and understand they must perform financially.
"We remain deeply concerned that our investments and the future of this company are in jeopardy," the pension funds said, citing a more than 20 percent drop in Disney's stock price over five years.
In response, Mitchell noted that Disney's market capitalization has grown from $2 billion to well over $60 billion under Eisner since 1984, while net income has gone from $98 million to more than $1.2 billion.
Mitchell also noted that Disney's stock price has risen nearly 45 percent in the last 12 months.
John Chartier, a spokesman for Hevesi, told Reuters that New York's opposition to Eisner's continued stewardship of Disney had softened.
"But that does not mean that this is it," he added. "We want to see that they have a good strategic plan in place."
Shares of Disney had closed off 49 cents, or 1.9 percent, at $24.90 on the New York Stock Exchange (news - web sites) before the funds' announcement.
