CalPERS Votes Proxy against Disney's Eisner; Audit Committee Vote Also Withheld.

Business Editors

SACRAMENTO, Calif.--(BUSINESS WIRE)--Feb. 25, 2004

The California Public Employees' Retirement System (CalPERS) announced today that it has decided to withhold voting for Michael D. Eisner for the position of Board Chairman/Chief Executive Officer of The Walt Disney Company, citing the company's dismal performance for the last five year period and the System's lack of confidence in the long-term strategic vision of the company.

CalPERS also intends to withhold votes for the three members who constitute the company's audit committee because the committee has authorized the auditor to perform an unquantifiable amount of non-audit services such as tax examination assistance and other services regarding internal controls.

"We have lost complete confidence in Mr. Eisner's strategic vision and leadership in creating shareholder value in the company," said Sean Harrigan, President of the CalPERS Board of Administration. "The company has lost more than 23 percent for the five year period -- nearly five times more than the losses incurred by the S&P 500 index for the comparable period. We believe shareholders should send the message loudly and strongly that it is time for Disney to get a more focused strategy that will improve shareholders return on invested capital."

CalPERS will vote for other Disney directors because of evidence they have begun to develop the building blocks needed to hold management accountable in the future.

"Our vote recognizes the fact that the Disney board is beginning to increase its attention on improving corporate governance," said Mark Anson, Chief Investment Officer. "They adopted enhanced governance guidelines in January; they added a code of conduct and business ethics for directors; and they recently added two independent directors that meet the CalPERS definition of independence," he said.

However, officials at CalPERS remain concerned that Disney board members Monica Lozano, Robert Matshllat, and Fr. Leo J. O'Donovan, S.J. have failed to abide by the highest possible standard when it comes to audit practices. "If we learned anything from recent corporate scandals, it is that audits must be beyond reproach," said Harrigan. "An auditing firm that receives money for other work beyond the audit just raises the risks for questionable audits."

CalPERS vote today does not endorse or oppose the messages sent by the dissident groups seeking reforms to Disney. "We don't fully embrace the messages being sent by either camp, and as such, our votes are based strictly on our analysis of the situation," Anson said.

CalPERS is the 29th largest single shareholder of Disney, with 9.9 million shares, valued at more than $235 million.

Disney's annual shareholder meeting is March 3, 2004.

CalPERS is the nation's largest public pension fund with assets of approximately $165 billion. The System provides retirement and health benefits to 1.4 million Sate and local public employees and their families. For more on CalPERS, visit www.calpers.ca.gov.