A Disney pushes Eisner's ouster

Walt Disney Co. chairman and chief executive officer Michael Eisner should be replaced because the company's shares have lagged and employee morale is low, former director Roy Disney said at a meeting of investors trying to oust the CEO.

"People are being discouraged and people are leaving in very large numbers -- talented people," Roy Disney said at a press conference in Philadelphia. Roy Disney said the rise in the company's shares over the past year is a "very temporary" improvement triggered by the success of the films "Pirates of the Caribbean: Curse of the Black Pearl" and "Finding Nemo."

Eisner, 61, will learn at Disney's annual meeting in Philadelphia today how many investors have withheld votes for his re-election to the board. The dissident directors, at least nine states' pension funds and advisers to institutional investors have said they won't support Eisner, the longest-serving chief executive among the 30 companies with shares on the Dow Jones industrial average.

The meeting drew about 600 participants, and 600 more couldn't get in, said ex-Disney director Stanley Gold, who manages Roy Disney's investments at Shamrock Holdings Inc. The meeting included individual investors, including Don Lomax of Bel Air, Md.

"The company has had really repugnant performance for the last 10 years, and it became clear to me eight years ago that it wasn't going to turn," Lomax said.

Lomax didn't sell because he promised himself "there were two companies I'd never sell out of my portfolio: Coca-Cola and Disney," Lomax said. "They represent the real core of what this country is all about."

Gold said the dissidents don't necessarily want to oust other executives, including Disney president Robert Iger, 53, or chief financial officer Thomas Staggs, 43.

"The fact is we're trying to bring in a new CEO who can bring in creativity and who has strategic vision and let him assemble his cabinet and his senior officers," Gold, 61, said.

Eisner also is fending off an unsolicited $54.1 billion purchase offer by Comcast Corp., the world's biggest cable company.

His defense against the ex-directors' calls for his resignation may be boosted by the last fiscal quarter's earnings, when Disney reported record quarterly revenue of $8.5 billion and profit of $688 million.

"Michael Eisner and the Disney board have come under pressure in the past and faced criticism and shareholder discontent and emerged relatively unscathed," Merrill Lynch analyst Jessica Reif Cohen wrote Tuesday in a report.

She said as many as 30 percent of shareholders may withhold votes for Eisner.

Disney shares fell 11 cents to close at $26.76 Tuesday on the New York Stock Exchange. They've fallen 25 percent in the past five years. They've risen 57 percent in the past 12 months.

"Walt Disney Co. is the No. 1 family entertainment company in the world," Iger said in a televised news conference scheduled at the same time as the Roy Disney conference. "We are predicting that our earnings will increase over 30 percent this year from continued operations."

Iger reiterated earlier comments that Disney expects double-digit increases in profit over the next three years.

Disney's board has "world-class governance," spokeswoman Zenia Mucha said Monday in a statement. Eisner has led Disney since 1984.

"We are not happy if Michael Eisner is in this company," Gold said at the press conference. "We're not going away until Mike Eisner is gone."

Roy Disney and Gold have accused Eisner of paying too much for acquisitions such as the Fox Family Channel and of alienating creative partners, including Pixar Animation Studios CEO Steven Jobs.

With Eisner gone, Disney would be able to achieve an agreement with Pixar "in a matter of weeks," Gold said. Jobs, 49, this year ended his distribution agreement with Disney, cutting Eisner's company off after 2005 from any hits Pixar generates.

Gold also said Disney's ESPN network has recently been signing less lucrative contracts with cable distributors.

Eisner is running unopposed for re-election as chairman and will retain his post as long as he receives a single vote. A sufficiently high proportion of withheld votes would pressure Disney's board to consider paring his responsibilities or seeking a successor, investors have said.

"We think that the board members are fine people," Gold said. "But they don't have the courage to stand up and ask management to be accountable."

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