Disney Stockholders Reject Auditing Reform Plan

February 20, 2002 (PLANSPONSOR.com) - Stockholders of the Walt Disney Co, the first company - following the Enron scandal - to announce plans to have different companies doing its auditing and consulting functions, have voted against splitting those functions.

On first announcing the plan – which was subject to shareholder approval, Disney noted that the decision was no reflection on auditor Pricewaterhouse Coopers – to which it paid $9 million in auditing fees, and $32 million in other fees – but an acknowledgement that such arrangements could constitute a conflict of interest, the WSJ reports.

Disney originally opposed such a proposal – originally put forward by the investment arm of the union pension fund United Association, but reversed its position.

Mass Proposal

The United Association is pursuing such shareholder proposals at about 30 companies – Disney was the first to bring the matter to a vote. But despite the company’s support of the proposal, it was rejected by about 54% of the voting shareholders.

After the proposal’s defeat was announced, Disney Chairman and Chief Executive Michael Eisner said the company would “proceed as if it had been” passed. A formal plan spelling out how Disney will separate the functions is expected later, according to the report.