Eisner receives a rebuke 

Disney Chairman Michael Eisner delivered his mea culpa last Tuesday to 11,000 shareholders at the Pond of Anaheim hockey arena, in a performance that won over most of the attendant journalists. "Shareholders voted overwhelmingly in Disney's favor on every item on the agenda," wrote the Orlando Sentinel reporter on the scene. Yes, about 89 percent voted to approve Eisner's new contract through 2006, most of them forgiving -- if not forgetting -- his $120 million (give or take $30 million) blunder in hiring and then firing Michael Ovitz as his No. 2 after just 14 months. But an 11 percent "no" vote is actually a serious rebuke, as was its followup. Among major news organizations, only the Wall Street Journal put those votes in the correct context, noting that the "nearly 13 percent of votes withheld from the re-election of incumbent directors `including abstentions` represents the biggest 'no' vote against a major U.S. corporation since Archer-Daniels-Midland Co.'s annual meeting in October 1995, when nearly 20 percent of the votes cast opposed the incumbent slate, according to the Investor Responsibility Research Center in Washington." ADM, for those with short memories, distinguished itself last October as America's most heinous corporate criminal, settling a price-fixing case with the U.S. Justice Department for a record fine of $100 million. At Disney's annual shareholders meeting, dozens of critics chastised Eisner's new pay package (worth perhaps $300 million over the next 10 years) as protesters outside waved signs comparing Eisner's compensation to that of a typical Haitian contract worker sewing Disney clothes; there, they earn about 28 cents an hour. Indeed, the level of support on two proxy resolutions -- one asking Disney to take better care of its poorest contract workers, the other seeking to tie executive pay to factors beyond mere financial performance -- went far beyond expectations of proponents. More important, the support also exceeded the percentages needed to keep the issues on the proxy agenda for next year. To do that, each needed support from at least 3 percent of shareholders; they both got about 8 percent. That means the issues won't go away. And it could be the start of a major campaign to make multinational corporations operate within a moral dimension. A living-wage campaign could affect business much as Nestlé was punished for marketing baby formula that killed Third World infants, and South Africa's apartheid regime was crippled in part by investors who refused to do business in that country. "We were among the first to get involved in the South Africa movement," says Kent Poindexter, a senior research analyst for the United Methodist Church's pension arm, an institutional investor in Disney and a backer of the resolutions. "We were told we were crazy." Disney has responded by promising to monitor its outside contractors and hold them to high standards -- no child labor, no slave labor, no beatings of workers. This is a typical tactic among corporations, according to Charles Kernaghan of the activist National Labor Committee, who uncovered many of the abuses cited at last week's meeting. Key to ending abuses is independent monitoring. But Disney's admission that there may be a problem is progress -- the proverbial first step. Conrad MacKerron, director of social research for Progressive Asset Management, a California brokerage house that pushed the shareholder resolutions, called last week's meeting a "significant victory." The question now is whether major media will explain the relevant issues. Published last year, "America: Who Stole the Dream?," by Donald Barlett and James Steele of the Philadelphia Inquirer, explains the link between "free trade" with low-wage nations and the wholesale disappearance of U.S. jobs that pay homeowner's wages. But most major daily newspapers still back NAFTA and report unpleasantness like slave labor as an anomaly -- when they report it at all. And then there are the people who own the stock -- folks who believe it's their right as Americans to make 15 percent, 20 percent, for doing nothing. Talk radio host Jim Philips of WTKS-Real Radio 104.1 FM did a show on the Disney meeting and comparative lack of coverage last Thursday. "Should this be an issue?" he asked. A fair number of callers said no. "I'm retired at 37 and my wife drives a new Lexus," one Disney investor told him. Philips asked the caller if he cared about anything or anyone else. "I guess I don't," the man replied.

More by Ericson, Edward Jr.


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