More Funds Line Up Against Disney's Eisner

The scurrying came on the same day that New York State Comptroller Alan Hevesi said the nation's second-largest pension fund was withholding support for Eisner.

"Under Michael Eisner's management, Disney has not performed well over the last several years," Hevesi said in a statement. "His tight control over Disney's decision making and his role as CEO and chairman of the board call into question his commitment to corporate governance reforms."

The New York State Common Retirement Fund controls about 8.7 million Disney shares worth about $225 million.

The state of Connecticut, which controls 534,000 shares, also announced it was withholding its support.

On Wednesday, the California State Teachers Retirement System, which controls about 7.97 million Disney shares, made its own announcement, citing concerns about board leadership that has led to a five-year annualized return of minus 5.29 percent, spokeswoman Sherry Reser said.

The California Public Employees' Retirement System - the nation's largest pension fund - also said Wednesday it was withholding its 9.9 million votes from Eisner and three members of the board's audit committee.

The interests of large pension funds do not necessarily align, however, with the interests of other institutional shareholders or even individuals, who say they have been pleased with the most recent performance of Disney's shares.

Large pension funds might own Disney shares as part of an indexing strategy - Disney is included in the widely mimicked Standard & Poor's 500 index and among the 30 components of the Dow Jones industrial average - which means many hold the shares for a long period of time. Disney's shares have lagged since about 1995 but have rebounded significantly over the past year as the economy recovers and tourists return to Disney's theme parks.

"We don't feel Mr. Eisner has done anything to stop the cyclical rebound we have been expecting," said Janna Sampson, co-manager of the AmSouth Select Equity Fund and director of Portfolio Management at Oakbrook Investments.

The funds control about 558,000 shares, which were up 43 cents to $26.73 at the close of regular trading Thursday on the New York Stock Exchange.

Sampson would not disclose how she voted her shares. But she said removing Eisner and bringing in a new chief executive posed its own risks.

"With a new CEO, you don't know what they are going to do and they are not a proven entity," she said.