THE COMPANY STORE

By Daniel Kadlec

For a consumer company that fusses over its "guests," Walt Disney Co. can treat its shareholders as if they'd been caught littering the Magic Kingdom. Its CEO, Michael Eisner, already a model for runaway executive pay, made investors livid last year by running up a $100 million tab in hiring and firing Michael Ovitz. More recently the stock has lagged the market, dogged by boycotts by religious groups protesting everything from racy movies to personnel policies and, potentially far worse for shareholders, by concerns that the formula for the Mouse's wholesome animated films has grown stale. Never mind that Disney shares, including dividends, have risen an average of 15.6% annually for the past 10 years, vs. 14.3% for Standard & Poor's 500. The company has a p.r. problem.

And don't think Eisner doesn't know it. So he's tossing individual investors a bone, revamping and reactivating a direct-stock-purchase program he shut down in 1990, contrary to the wishes of many shareholders. It won't make all his problems go away, not by a long shot. But what amounts to a small gesture by Eisner is a very big deal for do-it-yourself investors. Direct-stock-purchase programs are a dirt-cheap way to invest small sums on a regular basis in some of the world's best companies--and, yes, that would still include Disney. The programs let you buy stock directly from the company, saving the brokerage commission. If you have $50 or $100 a month to invest for the long haul, direct-purchase programs are a great vehicle.

The Disney program, revamped, is typical in that it levies some nagging fees: $10 to enroll, $5 plus 4[cents] per share on each purchase by check, and varying charges on shares bought via reinvested dividends. That last fee really irks me. Few programs charge to reinvest dividends. But, hey, somebody has to pay for Eisner's limo. Even with the fees, though, there is no cheaper way to buy Disney stock. Eisner is adding Disney to a roster that includes Exxon, Ford and Gillette, but the real benefit is that he will open a floodgate that other companies will probably pour through.

Why will they follow? No other big entertainment company has a direct-purchase program. But in this era of increasing shareholder power, whenever an industry bellwether makes the move, others tend to fall into line. US West was the first among telecom companies, in 1994; eight others have direct purchase now. Texaco got the ball rolling in oil five years earlier; now you can own Chevron and Mobil that way. Disney's move to reinstate direct purchase most likely will have influence outside its industry as well. CEOs of all stripes will probably conclude that it must have good reason--beyond the p.r. pop--for the flip-flop.

Many were convinced even before Disney's change of heart. The number of companies with direct-purchase programs has doubled in the past 12 months, to 330. Eleven of the 30 companies in the Dow Jones industrial average have such programs. "Look for 20 Dow stocks to have them by the end of next year," says Charles Carlson, editor of DRIP Investor, a newsletter based in Hammond, Ind., that reports on direct-purchase and dividend-reinvestment programs. Just because a company offers stock for direct purchase doesn't make it a great investment. But it's a nice edge if the stock is one you'd like to own anyway.

Daniel Kadlec is TIME's Wall Street columnist. Reach him at kadlec@time.com