Volume 2, No. 4. February 22, 2002
Shared reaction
Amid the forecasts, promises
and sometimes contentious grumblings typical of The Walt Disney Company's annual
shareholders meeting, this week's session in Hartford, Connecticut, saw stockholders
put forth two proposals that could have far-reaching impact for the whole amusement
industry.
This was the first shareholder meeting of any sort to witness a fallout of the Enron Corp. bankruptcy scandal. A shareholder proposal to ban Disney's independent auditing firm, PricewaterhouseCoopers, from also serving as a consultant to the company won 40 percent of the votes cast. Though the proposal failed to pass, analysts say the number of yea votes was extraordinarily high for a first-time proposal.
The vote, however, was effectively moot. Though Disney's board had opposed the proposed audit policy last September, the company adopted the measure anyway in January in light of public, political and commercial consternation over the growing Enron scandal. "We've been very prudent in this area over the years, with close and active oversight by the audit committee," news reports quoted Disney Chairman and CEO Michael Eisner. "But, in the current world, it's become more important than ever to make sure our shareholders, and the market as a whole, have full confidence in our financial reports, including the integrity of the auditing process." Wall Street watchers expect shareholders across the United States' commercial landscape to take up the issue throughout the year.
The other proposal set its sights squarely on the amusement industry itself: that Disney report to its shareholders the company's amusement park safety measures and medical response policies, identify all injuries on all Disney amusement park rides since 2000 and disclose the costs associated with those injuries, "including legal and out-of-court settlement costs incurred by the company." Prompted by a spate of highly publicized accidents at Disneyland in 2001, the proposal also referred to the U.S. Consumer Product Safety Commission July 2000 report on ride-related injuries.
The Disney board also opposed this proposal, citing the company's and the industry's overall safety record the past 50 years, Imagineers' adherence to ASTM standards, rigorous inspection practices and oversight by both insurance companies and state regulators. "We therefore believe that The Walt Disney Company is already an industry leader in promoting theme park safety and that a special report on the subject would not meaningfully benefit the Company or its shareholders," the company's proxy statement said.
The proposal won only a 4 percent approval, but needed only 3 percent to return to the table at next year's meeting. Consequently, the assault on the industry's safety standards has engaged another front.