FUNDS SEEK DISNEY CHANGE PENSIONS' PLAN AIMS AT ACCOUNTABILITY.

Byline: Greg Hernandez Staff Writer

BURBANK - Four major pension funds, including the California Public Employees' Retirement System, said Tuesday that they will push for shareholders to be able to nominate up to two directors to The Walt Disney Co.'s 11-member board of directors.

Their proposal, filed with the U.S. Securities and Exchange Commission, is the latest salvo in a series of power struggles this year that have resulted in Disney CEO Michael D. Eisner announcing plans to step down in September 2006. Eisner was stripped of his title as chairman in March after a bitter shareholder revolt led by the funds.

``The first step in restoring investor confidence was for Michael Eisner to step down, the second step was to search for a successor as the CEO, but the third step - getting independent directors to serve next year and in the years ahead - is the most important step of them all,'' CalPERS President Sean Harrigan said in a statement.

A spokesman for The Walt Disney Co. said Tuesday that ``as with all shareholder proposals we receive each year, we will review this proposal accordingly.''

The pension funds combined own more than 18 million shares of Disney stock. They said their proposal would be a way to hold the board of directors more accountable to shareholders and are seeking to have its measure voted on at the company's annual meeting in 2005.

If passed by a majority of shareholders, it would go into effect at the 2006 meeting.

This year's annual meeting was rocked by an unprecedented shareholder rebellion against Eisner and other directors who, although running unopposed, faced an extraordinary level of opposition from shareholders unhappy with the company's stewardship under Eisner.

CalPERS is joined in the measure by the New York State Common Retirement Fund, the American Federation of State, County and Municipal Employees Pension Funds, and the Illinois State Board of Investment.

``We are hopeful that Disney will add independent directors on its own. But it would have been irresponsible of us not to file this proposal since the issue has not yet been resolved,'' said New York State Comptroller Alan G. Hevesi, sole trustee of the New York State Common Retirement Fund.

Greg Hernandez, [phone]

greg.hernandez(at)dailynews.com