Disney CEO finds Minn. decidedly warmer

Assuaged by profit gain, shareholders re-elect Eisner to board

February 12, 2005|By Mike Hughlett | Mike Hughlett,CHICAGO TRIBUNE

MINNEAPOLIS - A year after serving as the stage for an unprecedented outpouring of shareholder anger, Walt Disney Co.'s annual meeting yesterday was a veritable lovefest for chief executive Michael D. Eisner.

Eisner was re-elected to Disney's board with only about 8 percent of the company's shareholders withholding their votes from him. Last year, Eisner was humbled when 45 percent of the company's shareholders withheld their votes and he was stripped of his chairman's position at the meeting in Philadelphia, which lasted five hours and attracted at least 2,700 shareholders.

Yesterday's meeting, by contrast, lasted about three hours and drew about 1,200 shareholders.

Disney's financial performance has perked up since last year - always a tonic for miffed shareholders. And the company has taken steps to improve corporate governance, a sore spot in the wake of a shareholder lawsuit over whether Disney's board adequately scrutinized the hiring and dismissal of Michael Ovitz.

Ovitz was Eisner's friend and briefly Disney's president until being booted in 1996, although with a $140 million severance package. The closely watched suit recently went to trial and featured reams of embarrassing information about Eisner, one of the country's more powerful and well-paid chief executives, and head of Disney for 20 years.

But there was no talk of corporate skullduggery or lazy directors yesterday. Eisner took the occasion to remind shareholders how much Disney had blossomed since he took the company's helm. Profits rose from $98 million in 1984 to $2.3 billion in 2004, and Disney went from 2,500 resort hotel rooms in 1984 to 32,000 last year.

"Since our last shareholders meeting, Disney's financial performance has been spectacular," Eisner said.

Disney's net income jumped 85 percent during its fiscal year that ended Sept. 30 - albeit from a low mark - while sales rose 13.6 percent. The upbeat trend continued in the company's fiscal first quarter, which ended Dec. 31, as Disney beat Wall Street's forecasts with a 5 percent increase in profit.

The good news has been reflected in Disney's stock: Since Sept. 30, it has risen about 30 percent compared with about 7.4 percent for the market as a whole as measured by the Standard & Poor's 500 index.

Even ABC, Disney's long-struggling network, has seen a revival with three popular new shows: Desperate Housewives, Extreme Makeover and Lost.

"It's great to have one new hit, but ABC now has three," Disney President Robert A. Iger said yesterday.

Iger, the internal candidate vying to replace Eisner, shared the stage with him yesterday. Eisner is scheduled to retire in September 2006. Iger is said to be Eisner's choice for the position, although he's certainly not high on the list of Roy E. Disney, nephew of Walt Disney and a Disney board member until being forced to retire in 2003.

Roy Disney, one of the largest shareholders in the company, has come out against Iger as a replacement for Eisner on his savedisney.com Web site. He and another former board member, Stanley Gold, led last year's revolt against Eisner. Earlier this week, both said they wouldn't support Disney board members up for re-election at yesterday's meeting.

They also said they questioned the credibility of the Disney board's search, reportedly out of concerns that no candidates outside the company had been interviewed for the job. Roy Disney attended yesterday's annual meeting, but did not speak, nor did he answer reporters' questions.

Disney's board is supposed to pick Eisner's successor by June.

The search is the board's "most important task," Disney Chairman George J. Mitchell said yesterday. The board is considering internal and external candidates, he said.

"The full board is fully and actively engaged [in the search] and is right on target to do exactly what we said we'd do," he said.

The California Public Employees' Retirement System, the largest U.S. public pension fund, with $18 billion in assets, said this week that it opposed Eisner's re-election but would support other directors, including Mitchell and Iger.

Disney shares fell a penny to close at $29.34 yesterday on the New York Stock Exchange, up from about $21 in August.

The Chicago Tribune is a Tribune Publishing newspaper.

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