Disney Meeting May Not Be the Happiest Place

Walt Disney Co.’s annual meeting, which in the past has resembled a love-fest gathering of stockholders toting free company merchandise, is likely to be stormier than usual on Tuesday in Anaheim, sparked by the rich severance deal given departed President Michael Ovitz, the wealthy pay package negotiated for Chairman Michael Eisner and such social issues as sweatshops.

In the end, however, Disney’s biggest problem will probably be an embarrassing public relations day and an uncomfortable three hours for its executives. Despite announcements from some unhappy institutions that they withheld votes for five directors up for election and that they are voting against Eisner’s package, insiders say the outcome is already a fait accompli.

Sources familiar with the vote count say that Disney directors will be overwhelmingly elected, and that stockholders will follow the recommendations of Disney’s board in approving Eisner’s package, approving an executive bonus plan and voting down resolutions linking pay to social issues and another anti-sweatshop one.

Still, several major institutions, including the California Public Employees’ Retirement System and the College Retirement Equities Fund, said they will cast dissident votes as a protest even though Disney’s stock is up more than 10% this year so far this year.

One clear catalyst is the Ovitz package--$39 million in cash and 3 million stock options worth more than $50 million now. Eisner also is expected to get some grief over his new package of eight million options that could potentially be worth hundreds of millions of dollars if Disney’s stock performs exceptionally well in the next decade.

Disney’s proxy lists the current value of Eisner’s package at about $195 million. Executive pay expert Graef Crystal, who was consulted on the contract, says that with Disney’s recent stock rise, a number like $250 million is probably better.

The meeting, scheduled at the Pond where Disney’s Mighty Ducks hockey team plays, will seat a maximum of 14,000 shareholders, although executives don’t know how many will show. One lure is the prospect of free Disneyland tickets.