Eisner rebuked by Disney board

PHILADELPHIA -- Michael Eisner faced a rebuke of his leadership of The Walt Disney Co. Wednesday as 43 percent of shareholders withheld their support for him in a vote at the company's annual shareholder meeting.\nThe size of the no-confidence vote against Eisner was larger than many had been expecting and represented a victory for shareholder activists Stanley Gold and Roy E. Disney, former board members who have been leading a revolt against him.\nEisner is running for re-election unopposed, so his job is not in immediate danger. But the depth of shareholder dissatisfaction with him could lead to other changes, such as a separation of the chairman and CEO roles, both of which he currently holds.\nIn his opening remarks, Eisner defended his 20-year record at the helm of Disney. Eisner, his voice hoarse, said: "I love this company. The board loves this company. And we are all passionate about the output of this company."\nEisner acknowledged the performance at Disney's ABC network was "disappointing," but he also told the shareholders Disney has "the management skills and creative talent to continue its growth path."\nGold and Disney went slightly over the 15 minutes they were allotted at the meeting to present their case against Eisner, saying it was not sufficient for the company simply to split the roles of chairman and CEO.\n"Michael Eisner must leave now," Gold said. "We see today's meeting as a first step toward saving the company. ... We are seeking real and meaningful change."\nSeveral major pension funds representing millions of Disney shares joined the disaffected camp and said they would withhold their approval from Eisner and several board members to press for greater board independence.\nEisner defended his management team, saying, "Disney's record of creating value is indisputable. ... We are a very well-managed company."\nDisney executives noted the company's stock has risen more than 40 percent in the past year and the company has said earnings per share will rise 30 percent this year and by double digits through 2007.\nCharles Elson, the director at the Center for Corporate Governance at the University of Delaware, called the 43 percent withholding figure against Eisner a "phenomenal number."\n"The board and Mr. Eisner have to step back following something as stunning as that. ... It means that some sort of change has to take place on the board and at the upper managerial levels."\nDisney is under intense pressure from state pension funds and proxy advisory firms to split the chairman and CEO jobs. It has been unwilling to do so, and as late as Tuesday, Disney board member George Mitchell defended the company's decision to name him the "presiding director" with powers to chair meetings of the board's independent members outside the presence of Eisner and other managers.\nMitchell has said the company felt it would be best to wait until at least 2006, when Eisner's contract expires, to decide on splitting the roles. But as support for that action is growing, the board may be forced to act earlier, naming a different board chairman and keeping Eisner on as chief executive.\nComcast Corp., the cable television giant that last month made an unsolicited bid for Disney that was promptly rejected, urged the Disney board to take a new look at the proposal in light of the opposition shareholders demonstrated against Disney's leadership.\nComcast said it would not sweeten the offer, originally valued at $54 billion. "The ball we think is very much going to be in Disney's court," Cohen said.\nShares of Disney fell 11 cents to $26.65 Wednesday on the New York Stock Exchange.\n-- Associated Press Business Writers Seth Sutel and Rachel Beck in New York contributed to this report.