Shareholders Ask Disney to Spread the Wealth

Press Release
For Release February 13, 2002
Contact: Betsy Leondar-Wright
(617) 423-2148 x113

Shareholders Ask Disney to Spread the Wealth

Resolution urges limit on shares for top officers

At the Disney shareholder meeting on Tuesday, February 19, at the Civic Center in Hartford, CT, shareholders will vote on a resolution calling on the company to limit the number of stock options the company may grant to executive officers.

The resolution will be presented by Responsible Wealth member Marnie Thompson of Greensboro, NC, on behalf of Disney shareholders Garold Faber and Michele McGeoy, both of California. They singled out Disney for this resolution because the company has a long history of concentrating large numbers of stock options in the hands of a few executives.
The resolution would limit any one executive to no more than 5% of the total options granted in a given year; it would limit the executive officers as a group to no more than 10% of total options.

Presently, Disney’s top five officers, a group that represents 0.004% of all employees, controls more than 15.6% of stock options, with one single executive, CEO Michael Eisner, personally controlling more than 11% of outstanding options.

Disney’s stock has performed quite poorly in recent years. According to the company’s proxy statement, for the five-years ending September 30, Disney’s stock declined 9 percent, compared to a 86 percent increase in the Standard & Poors 500 and a 36 percent rise in Disney’s self-defined peer group of companies.

Despite this lackluster performance, Disney’s CEO has been one of the most highly compensated executives in corporate America, receiving more than $667 million in total compensation over the last five years, when Disney performance has been so poor. Most of Mr. Eisner’s compensation came in the form of overly generous options plans, which allowed Disney executives to prosper as the market rose, even though Disney’s stock has done poorly.

“Disney’s executive compensation system is badly broken and needs to be fixed,” Marnie Thompson says in her statement. “Numerous academic studies point to the positive effects that broad based employee ownership has on everything from revenue growth to quality improvement.”

This is the third year that Responsible Wealth members have filed resolutions about the wealth gap with Disney. In 2000, the resolution was challenged by Disney and excluded by the SEC, but the 2001 and 2002 resolutions were not. A resolution identical to this year’s version won 9.8% of the vote in 2001, an unusually high level of support for a first-time resolution. Shareholder resolutions must win 3% of the vote to be allowed to come back for a second year; this resolution tripled that benchmark in its first year.

In addition to the resolution at Walt Disney, Responsible Wealth members have introduced resolutions on executive pay issues at 9 other firms: AOL Time Warner, AT&T, Citigroup, Countrywide Credit, EMC, ExxonMobil, FleetBoston Financial, General Electric, and Household International. The text of the resolutions can be found at Responsible Wealth's website: www.responsiblewealth.org.

Responsible Wealth is a growing network of over 450 businesspeople, investors and affluent individuals in the top 5 percent of income and wealth working to reverse the trend towards economic inequality. It is affiliated with United for a Fair Economy, a national nonprofit organization that spotlights the growing wealth gap and advocates shared prosperity.

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