Disney debate

Anti-Eisner forces push for the chairman's ouster on eve of Walt Disney Co.'s annual meeting

March 03, 2004|By Bill Atkinson | Bill Atkinson,SUN STAFF

The way some Walt Disney Co. shareholders see it, if Michael D. Eisner were given an executive evaluation he would likely get a D minus.

Hundreds were expressing their negative opinions of him in no uncertain terms yesterday in Philadelphia near the site of the company's annual meeting today.

"The current way the company is run, they have lost touch," said Cheryl Lowe, a 54-year-old naval architect from Maple Shade, N.J. "I am looking for the board of directors to wake up and realize they have to throw Eisner out."

Lowe was speaking from the crowded floor of a large meeting room in Loews Philadelphia Hotel adjacent to the convention center, the site of the annual meeting.

About 700 shareholders were addressed by Roy E. Disney, 71, Walt Disney's nephew, a former Disney director and Eisner's bitter enemy.

"Management has failed miserably at increasing shareholder value," said Disney, who was sporting a blue Mickey Mouse tie.

Stanley P. Gold, another former Disney director and a partner in the protest, said, "Our goal is to send a loud signal of disapproval to Michael Eisner. We are not going away until Michael Eisner leaves the company."

But as bad as Eisner's critics say his performance has been, the embattled Disney chairman and chief executive will almost certainly dodge the ax when shareholders meet.

One reason is that the alternatives could be much worse with Disney facing a hostile takeover bid from Comcast Corp., the country's largest cable operator, which is based in the city where today's meeting is being held.

So Eisner, 61, who has run the company for 20 years and has had similar scrapes, is likely to escape immediate retribution, but he should not count on hanging onto his job for the indefinite future, industry experts said.

"He is in a precarious position," said David Mantell, a cable and media analyst at Loop Capital Markets, a Chicago investment banking firm. "If a significant number of shareholders withhold their votes, that has the effect of sending the board of directors back to Burbank and sets the stage for them to consider what to do next."

Today's meeting is expected to be a slugfest between Eisner and those who are demanding his head. The company has acknowledged that the holders of more than 30 percent of Disney's outstanding shares might withhold their support for Eisner, which would send a strong message that change is desired.

"I think it gets pretty bad," said Peter Mirsky, a media analyst at Oppenheimer & Co. in New York. "The hornets' nest has been stirred up, and the hornets are angry."

Some experts think it is only a matter of time before Eisner is forced to give up one of his titles, something large investors are demanding because, they contend, he has maintained an iron-fisted grip on Disney's management.

In the meantime, Eisner has been fighting to maintain his position at the helm of one of America's legendary companies. He has been hustling from meeting to meeting with large shareholders in recent weeks to patch up differences and answer questions.

Eisner and other Disney representatives spent an hour and a half in Columbus, Ohio, with officials from the Ohio Public Employees Retirement System on Thursday. But the system executives had heard his excuses before, said Cynthia Richson, the system's corporate governance officer.

"You say, `Wow, everything is sort of becoming an excuse,'" Richson said.

She said Eisner told system officials that he and Disney were unfairly targeted because of their stature in corporate America and that he sounded like a "victim." Asked to explain the company's poor stock performance, Eisner blamed it on the Sept. 11, 2001, terrorist attacks, Richson said.

The meeting failed for Eisner. The Ohio retirement system said Monday that it wouldn't vote for Eisner and three directors, including former U.S. Sen. George J. Mitchell.

"You can't use the 100-year-flood excuse repeatedly," Richson said.

The institutional investors aren't the only ones who aren't happy.

Vehement criticism of Eisner's management could be heard yesterday down the stairs and out the door from the hotel meeting room where the shareholder protest was held.

"I want to protect Disney; I have been to Disney six times," said James Burns, 8, of Riverside, N.J. who was there with his mother, Raquel Frech, 28.

"Eisner needs to go," Frech said. "His heart is not in it. I can't imagine a world for [James] without Disney."

Harold Troupe, a 52-year-old car salesman from Lancaster, Pa., said Eisner should step down. "I think he has run out of ideas," said Troupe, who was angry about the Disney stock price. "The stock has gone in the toilet," he said.

Relatively few Eisner supporters attended the protest meeting.

Cynthia Ellner, 54, a pension attorney from Los Angeles, said she was undecided about how to vote at the annual meeting. After Disney spoke, she said, "He has not made me a true believer. It is about Roy Disney's personal financial wealth. I am just not going to buy into it. It is a very ... political thing."

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