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Last Updated: Friday, 27 February, 2004, 06:05 GMT
Pressure increases on Disney boss
Michael Eisner
Mr Eisner faces a crunch shareholder meeting
The campaign to oust embattled Disney boss Michael Eisner looks to be gaining momentum.

Six other US state pension funds with investments in the iconic company have now joined California in calling for Mr Eisner to stand down.

The head of the New York fund, the second largest in the country, called for Disney directors "to replace Mr Eisner as soon as possible".

Mr Eisner is accused of poor management and bad strategic thinking.

Critics of the Disney chairman and chief executive say this has resulted in reduced turnover and profits, and left the company vulnerable to a hostile takeover by US cable TV giant Comcast.

Strong opposition

With pension funds from New York, New Jersey, Connecticut, Massachusetts, Virginia and Oregon joining that of California, more than 30 million Disney shares are now up against Eisner.

While this is only around 1.5% of Disney stock, the desertion of the state pension funds is a major public relations blow for Mr Eisner.

And such is their clout, the pension funds' decision could persuade other Disney investors to follow suit, ahead of what looks like being a make-or-break annual shareholder meeting for Mr Eisner on 3 March.

He appears to be taking the threat very seriously and on Thursday was in Ohio, meeting with representatives of that state's pension fund in an apparent bid to shore up support.

Denise Nappier, Treasurer of the Connecticut fund, predicted that the March 3 meeting would be a heated event.

Family firm

"Disney is at a crossroads and the vote of shareholders next week will reflect an unparalleled mix of uneasiness, frustration, progress and optimism," she said.

The pension funds of Ohio, North Carolina and New York City have all now said they could announce decisions on Mr Eisner by Friday.

The call for Mr Eisner to resign was first made by former Disney directors Roy Disney, nephew of founder Walt, and Stanley Gold, who both resigned from the board last year.

In addition to the growing number of state pension funds, their call has also been supported by investment adviser Glass Lewis and Co.

Glass, which votes on behalf of shareholders who want to avoid a trip to the annual meeting, said Disney's board "has been notoriously insular, famously gullible and blindly loyal" to Mr Eisner.

Tough style

Mr Eisner's critics say he does not understand the cartoon business, and has overspent on buying theme-parks, an area where the company is currently faring especially badly.

AC Moore, chief investment strategist at Dunvegan Associates in Santa Barbara, told the BBC's World Business Report that it was an uphill struggle for Disney's management at this time.

His autocratic management style has angered many, in particular traditionalists who remember the company's roots as a family business.

However, he, currently at least, retains the backing of Disney's board.




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