Dude, Where's My Proxy?

First published February 16, 2004

By C. W. Oberleitner

In a follow up to last week's column, "Got Proxy?" C. W. Oberleitner reports that more than a few JimHillMedia readers who own stock in the Walt Disney Company wrote to him to share their recent experiences with WDC Investor Relations.

At the conclusion of last week’s column, Got Proxy, my story about WDC shareholders having a hard time getting their hands on copies of the company’s 2003 Annual Report and Proxy Statement, I said to our reader’s, "If you’re having any problems getting information or voting I’d like to hear from you as well." Like the man said, I should be careful what I wish for.

The Walt Disney Company, as required by the Securities Exchange Act of 1934, filed its annual report and proxy statement with the Securities and Exchange Commission (SEC) on January 27th of this year. In that filing, they announced that the company would hold its annual shareholders meeting on March 3rd, some 43 days later, in Philadelphia.

Last Tuesday, February 10th--fourteen days after Disney’s SEC filing and 22 days before the shareholders meeting--I awoke to discover an inbox full of reader responses to my story. Since that time, I have heard from dozens and dozens of shareholders, virtually all of whom share one thing in common: they have yet to receive a WDC Annual Report, Proxy Statement, or ballot. And, regardless of how their shares are held, they all were very accustomed to receiving their investor materials well in advance of the company’s annual meeting.

The Investors Speak

I want to thank all of you who took the time to write. The response has been so overwhelming that I have not been able to respond to each of you individually. For this, I am truly sorry. Here, in the order I received them, is a sampling of our readers and WDC shareholders’ responses to last week’s column.

Some readers speculated that the WDC was moving toward "e-filing."

I received and email stating that the annual report was available online about a week ago and then on 2/7 I received an email containing a link to the proxy statement online and information on how to vote my proxy. This link also contained information on how to attend the annual meeting.

Disney Investor relations website contains an option to receive all comunications online, so they do not mail my information. I have been receiving all communications by email for the last 2 years. I also receive my "huge" dividend by direct deposit, so I never receive any physical mail from WDC.

This e-delivery may explain why some people do not receive their information in the mail. If they have accessed the investor account at WDC Investor relations, it is very simple to change to email delivery.

Still others, like Greg Sheffield, President of SingleShare.com, wanted to further help me and our readers understand just how difficult it can be to reach out to over two million shareholders.

Hello Mr. Oberleitner,

I read with interest your article today on JimHillMedia.com about the perceived delay of the proxy statement mailing and thought you might like to know about my own experience and take on the issue.

Our company, SingleShare.com, offers single shares of stock (including Disney), in the form of real framed stock certificates, to be given as unique gifts. Our own Disney holdings are in book-entry form (virtually the same as holding certificates, except we don't). We have consented to receive corporate communications from Disney via email, and we did receive the attached email on Saturday, Feb. 7 (25 days prior to the meeting), providing links to the annual report, proxy statement, and a website at which we could vote our proxy.

Incidentally, I received today a similar notice from the William Wrigley Jr. Company announcing their March 9, 2004 annual meeting and providing proxy links (28 days prior to the meeting).

I searched my recent corporate communications and also found an electronic invitation to vote my Qualcomm proxy at their March 2 annual meeting. That email was dated January 9 (46 days prior).

I recently (around the end of January) received via postal mail my John Deere annual report and proxy statement announcing their Feb. 25 meeting.

I can confirm that when we receive proxy information from other companies via postal mail, it is usually--but not always--bundled with the annual report, and it is usually about one month prior to the meeting. Unfortunately I cannot remember with accuracy how far in advance I have received Disney materials in past years.

For me, Mr. Spelich's explanation that the proxy statements serve as the mailing labels for the annual reports rings true. If you do find shareholders who received annual reports from the company without proxy ballots enclosed, that would be very interesting indeed because it would mean the company went to the effort of printing mailing labels for the reports, then incurred the additional mail preparation and postage expense associated with a separate proxy statement mailing. It would be far easier and less expensive to simply push the whole combined mailing to the latest possible date.

The "can't dump 2.4 million pieces of mail on the post office in one day" statement (and you must admit 2.4 million annual reports is a ton of mail; more like 500 tons), combined with the fact delivery times differ for various parts of the nation, would adequately explain staggered receipt of the mailing. The $64,000 question is whether the company intentionally delayed the mailing to minimize the number of proxies returned. Here's hoping you're able to uncover the answer!

Best wishes,

Greg Sheffield
President
SingleShare.com LLC

Most shareholders, however, reported that as of their last U.S.P.S. delivery they had received nothing from the WDC. As Jim reported in his February 11th column, "Oh Mr. Postman, look and see. If there's a proxy, a proxy for me ...", others had an even more interesting tale to tell.

Hi Chuck:

I read your article on JimHillMedia.com today with extreme interest.

I hold WDC stock certificates both directly and through a shareholder fund.

I have NOT received my annual report or my proxy statement as of 2/9/04. What I did receive on 2/9/04 is of interest. I received a lengthy (1 page, both sides printed, small font) letter from the Directors of the WDC urging me to ignore the recommendations of Roy Disney and Stanley Gold and vote with the board's recommendation. It cited 8 bullet point items of accomplishments of the company to exemplify what a great job Eisner and the current management team were doing. It also cited 5 bullet point items refuting statements Roy & Stanley have made regarding the upcoming voting. They end the bullet point list with the sentence, "Do not be misled."

Just thought you'd be interested to know at least some of the shareholders of the WDC are being sent pre-proxy propaganda.

Some shareholders reported that they had had an experience similar to that of the two folks whose tale of receiving the WDC annual report sans proxy was the genesis of last week’s column.

We have yet to receive our annual report and proxies. My mother, however, did get an annual report although the expected proxy voting information was not included.

I've been thinking the same as you--they're closing the window of

opportunity for voting as much as they legally can this year. They're scared of the votes.

(ps--if you use this for anything, please take my name and address off of it. I do a lot of promotional work with Disney as a non-employee and don't want to run any risk of jeopardizing the relationship)

In last week’s column, I mentioned that my research uncovered a great many equities holders that weren’t quite clear about how the shares they held in various companies could be voted. Many of the responses I received were from people who are very aware of how their shares are held.

I have been a Disney shareholder since 1987, when I was hired by the company (I no longer work there). My last purchase was in July 1997 when (adjusting for splits) it was worth $25.50/share. So I'm still waiting for the stock to rise to what I paid for it.

I have not received either the annual report or the proxy.

I hold Disney stock in 4 ways:

1. I hold them in certificate form (kept in my bank's safe deposit box). These were shares bought through the Disney ESOP plan that were converted into a certificate when I left the company.

2. I have them in an IRA brokerage account. These were rolled over from my 401K from when I worked at Disney.

3. I have them in a straight-non IRA brokerage account.

4. And this is a little weird. During the time I was waiting for the company to convert my ESOP to certificate, there were some dividends earned that were not credited until after the certificates were issued. So I hold about 20 shares in the form of warrants.

So I am on several lists. I usually get 3 annual report/proxy packages each year. One from Fidelity, one from Morgan Stanley Dean Witter, and one from the Walt Disney Company. So far, I have not received ANY of them.

If I don't get one soon, I'm going to have to reach the conclusion that Disney is playing games with shareholder votes.

As the week went on, I continued to hear from JHM readers who own stock in the WDC. The following letter was received February 12th, just 20 days prior to the meeting.

Dear C.W.

Read your post GOT PROXY? and am compelled to respond. I am not nor have ever been employed by Disney or their affiliates. I have owned Disney shares for over 3 years held in my IRA account in street name. In the past I have always gotten my Annual Report and Proxy at least 5 to 6 weeks in advance of the meeting, however this year I have received nothing at all so far. As I travel to Philadelphia twice a month for business and my schedule coincides with the meeting I'm planning on attending this year -but without my materials this may prove to be impossible. I too wonder if this isn't an attempt to quell the growing tide of dissent over Mr. Eyes&Ears (lol) monarchy.

I will advise you if and when my materials arrive.

Loved your piece.

On Friday, February 13th, 19 days before the meeting I was still receiving letters like the two that follow. They indicate that not only were there still shareholders out there who had yet to receive investor materials but the problem was becoming so wide spread that it was becoming very difficult, if not impossible, to get help from the WDC Investor Relations department.

I just read your article at http://www.jimhillmedia.com regarding Got Proxy. It was very timely, as I too have been wondering where my annual report and proxy statement are. In the past years I have received them both (proxy & statement) in January-ish. To confirm that I am an actual stock holder (holding my own certs) and DO NOT work (or ever have worked) for WDC. I live in San Jose, California – no such receipt yet. Bulk mail usually takes only 2 -3 days to get from LA to here. Additionally, I attempted to contact investor relations several times today for information however the line simply rings busy.

And…

I just read your [& other] articles on SaveDisney.com. It is 10 AM EST 2/13 04. My wife owns Disney stock with a framed certificate hanging on a wall. Ditto for my grandson. [these were purchased by me for sentimental rather than investment value] As of yet, none of us have received anything...Annual report nor proxy nor said letter from Disney supporting Eisner. Never had a problem in past years. Tried several times this week in trying to get through to Disney shareholder relations by phone. You can't even get in the qeue to get through. We live in Phila & are planning on attending the shareholder's meeting [plus Roy Jr.'s meeting] and voting no on Eisner. We are very angry with what's going on & impatiently waiting by our mail box.

Big Deal

Why is getting investor materials to shareholders in a timely fashion a major issue for WDC shareholders opposed to Michael Eisner’s continued management of the WDC? Because of the following line from the WDC proxy statement:

Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Board. The Board’s recommendation is set forth together with the description of each item in this proxy statement.

In other words, if as a WDC shareholder you don’t mark and return your proxy card or ballot to the company prior to the meeting, the company, as represented by Michael Eisner as Chairman of The Board of Directors and his fellow board members, get to vote for you.

Several readers wanted to know if the WDC might not be violating SEC regulations by deliberately slowing down the pace at which it distributed shareholder information packages.

"We are only required to supply shareholders with proxy information ten days in advance of the annual meeting." John Spelich, WDC corporate communications spokesman, told me in an earlier series of conversations. "Ten days before is the rule."

Spelich went on to say that they (the WDC) had been in the process of sending out investor information packages that contained annual reports, proxy statements, and ballots for more than a week.

When asked about the source of the "Ten Day Rule," Spelich said that he "thought" it was an SEC requirement. For the record, the SEC says that the requirement for when shareholder information is to be sent out is left up to the state in which a company is incorporated. The WDC is incorporated in Delaware. No such "Ten Day Rule" could be found anywhere on the state of Delaware website.

You can download a copy of the WDC annual report and proxy statement at Disney.com, Investor Relations.

This copy of the proxy statement is for public record only and does NOT include a ballot. It does, however, contain instructions on how shareholders of record can vote via phone, FAX, and the Internet.

You can write to Walt Disney Investor Relations at:

Disney Shareholder Services
PO Box 11447
Burbank, CA 91510-1447

Or telephone them at: 818 553 7200.

You can learn more about how to determine how your shares are held and how to properly vote them at SaveDisney.com.

And if you are still having problems getting information or voting, I want to hear from you as well.

C’ya real soon!