Disney

Storybook: "Responsible Wealth in the Magical Kingdom"

Resolution: Broadening Ownership at Disney

WHEREAS, Disney aims to exemplify America's best values while also creating economic value for shareholders;

WHEREAS, fast-widening economic disparities and growing financial insecurity are endangering Disney's traditional customer base:

• the financial wealth of the richest 1% of U.S. households now exceeds the combined wealth of the bottom 95%;
• the nation's median household financial wealth is less than $15,000. The average American family, if they lost their jobs, have enough savings to maintain their current standard of living for just 36 days;
• the 1999 compensation of the average large company CEO is 419 times that of the average manufacturing worker, up from just 42 times as recently as 1980;
• the median weekly wage is 7% lower than in 1973 on an inflation-adjusted basis while between 1969 and 1994, the typical work year expanded by 184 hours, representing four weeks of lost leisure;

WHEREAS, these economic disparities are replicated within Disney:

• Disney's CEO Michael Eisner received the highest compensation of any American employee in 1998, more than $575 million;
• The gains from this one employee's exercised stock options since 1992 ($1.06 billion) exceeds the cumulative shareholdings of Disney's 117,000 worldwide employees in the company's two principal employee ownership vehicles ($895 million as of 12/31/98 in two 401(k) plans);

WHEREAS, if only half the options given this single employee had been divided among all of Disney's employees, each would have received, on average, over $4,200, still leaving Mr. Eisner with $500 million, more than 33,000 times the financial wealth of the median American household;

WHEREAS, Disney's primary customer contact - its non-salaried employees - are excluded from ownership via the company's principal employee ownership vehicles;

WHEREAS, employee ownership firms grow faster, create more jobs, foster more employee wealth, attract and retain higher quality employees, and take a longer-range perspective;

WHEREAS, Disney's accountability, channels of communication and ability to give due consideration to the common good of the community would be enhanced by converting employees into shareholders;

WHEREAS, research confirms that sustained superior performance is due to contributions across a broad range of employee skills along with shared values within a firm, and not to the efforts of a single employee;

WHEREAS, employee ownership is a positive national trend, with 10,000 companies sponsoring employee stock ownership plans and 31% of large firms offering broad-based stock options, up from 13% in 1995;

RESOLVED, that the Board foster a broad-based ownership culture by creating an employee stock ownership plan (ESOP) or similar vehicle, in which all employees participate. The ESOP would be funded with an annual stock contribution at least equal to the value of the equity-based compensation of Disney's corporate officers (including stock options, restricted stock awards and stock appreciation units).

SUPPORTING STATEMENT

Disney's past practice of concentrating ownership in the hands of a single employee is inconsistent with our company's dedication to reflect the best in contemporary American culture. An ownership culture enhances economic performance, customer service, employee retention and social responsibility.

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