When Disney (NYSE: DIS ) dissidents Roy Disney and Stanley Gold asked for the breakdown of how the company's own 401(k) plan voted on the issue of CEO Michael Eisner's re-election to the board last month, one had to wonder what they were looking to uncover.
It turned out to be the mother lode. A full 72.5% of the shares cast by Disney's former and current employees in the stock retirement plan voted against Eisner's retention. While you may be waking up to that headline today, the real shocker is that Disney's spin makes the board look even worse.
Disney views the sum as inconsequential. It points to the fact that just a quarter of the 28.6 million shares in the 401k were actually voted. So, the logic goes: 72.5% of 25% is just 18% of Disney's 401(k) pension shares cast against Eisner. That's not a big deal, is it?
If at this point you're nodding your head and thinking that Disney has a point, you just stepped into the same trap Disney did with its poor spin. See, 72.5% of 25% may be just 18%, but the remaining 27.5% of that 25% pie that voted in favor of Eisner represents just 7% of the pension plan stock.
Here we are, with the company's board on the ropes -- fighting for its tenured life -- and just 7% of the shares backed by the company's former and current employees were cast in favor of the CEO? Disney claims that the sample size is insignificant. I claim that it shows a level of apathy that's damning.
Disney shrugs it off by pointing out that just 6,000 of the active workforce of 112,000 employees cast a ballot. Again, Disney should have quit while it was behind. Pointing out how the vast majority of its "cast members" either does not wish to bank its retirement on Eisner by participating in the 401(k), isn't eligible, or simply doesn't care enough to vote in favor of its leader shows a deeper void of confidence than anyone could have imagined.
Just pretending that nothing's wrong may work well when you're talking about monsters under the bed, but it's a dangerous approach when you're dangling from the ledge.
Despite promising 40% profit growth this fiscal year, the mouse can't chase the demons away. From losing Motley Fool Stock Advisor recommendation Pixar (Nasdaq: PIXR ) as an animation partner to upsetting some of the largest state pension funds with its underperformance and lavish compensation, Disney's board needs to wake up and realize that it's not as well-liked as it thinks.
Even George Mitchell, elected by the board to take the chairman role from Eisner, received an equally alarming nay vote of 64% of the 401(k) shares.
This isn't an impossible situation for Eisner. However, the first step in winning back confidence is admitting publicly that you lost it. That may be a tall order for a company stuck in spin cycle.
Do you think the Disney pension plan vote is meaningless? Does it matter whether the votes were cast mostly from former cast members or current ones? Will ego get in the way of conceding that problems do exist? All this and more -- in the Disney discussion board. Only on Fool.com.
Longtime Fool contributor Rick Munarriz owns shares in Disney and Pixar. Why not? He owns all of the Pixar DVDs and he's at Disney World every other month.
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