Los Angeles Times, September 12, 2002 article: "Disney Investor Calls for Meeting | Media: Providence Capital wants institutional shareholders to discuss the company's corporate governance issues, including the board's makeup."

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Source: Los Angeles Times, September 12, 2002 article

Disney Investor Calls for Meeting

Media: Providence Capital wants institutional shareholders to discuss the company's corporate governance issues, including the board's makeup.

September 12, 2002|RICHARD VERRIER and JAMES BATES | TIMES STAFF WRITERS

Tapping impatience among some investors in Walt Disney Co., New York investment banking company Providence Capital is calling a meeting next week of institutional shareholders to discuss "critical issues" surrounding the entertainment company's performance.

Providence Capital, headed by well-known corporate activist Herbert Denton, said the Tuesday meeting will focus mainly on corporate governance issues, including the remaking of Disney's board and a succession plan for Disney Chief Executive Michael Eisner.

"In view of Disney's recent stock performance, we believe the board would welcome the views of its largest stockholders prior to instituting changes in the company's governing body," Providence said in a statement.

The meeting will be held a week before Disney's board of directors is scheduled to meet to discuss, among other things, various steps to reform the company's board. In August, Eisner said that Disney will shrink its board, reduce the size of its committees and strengthen its independence by year's end. In a government filing last month, the company disclosed that three board members have relatives who were employed by Disney.

"We believe we have a good sense of how our major shareholders feel about the company," Disney spokesman John Spelich said. "We welcome input from all our shareholders."

Eisner and Chief Financial Officer Tom Staggs also will hold what the company described as routine meetings with investors and analysts Friday in New York.

The meetings come as Eisner faces heavy pressure from investors and some influential board members to bolster the company's stock price and improve the company's earnings, which have been hurt by sagging theme park attendance and weak ratings at its ABC television network. Disney's stock price, which lost 7 cents on Wednesday to close at $16.18 on the New York Stock Exchange, fell to an eight-year low last month.

"The company is clearly reaching out to investors and that's good," said analyst Jordan Rohan of Wit SoundView.

Denton wouldn't say how many shares Providence owns, but described his company as a small shareholder.

Providence bought shares in the company in late summer when Disney's stock traded at around $13 a share, believing the company was undervalued.

Providence is an activist investor that has waged fights with ICN Pharmaceuticals Inc., Aetna Inc. and Tyco International Ltd. Providence has two or three meetings like this a year. Providence has advised the California Public Employees' Retirement System, among others.

Denton has faced criticism for accepting fees from companies that he has targeted. He called such criticism a cheap shot. "We're not looking for any fees from Disney," he said.

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