Eisner Protest Vote Reaches 43%

March 3, 2004 (PLANSPONSOR.com) - While embattled Walt Disney Co. chief Michael Eisner won re-election in a race in which he ran unopposed, more than four in 10 shareholder votes (43%) were nonetheless withheld in a surprisingly strong no-confidence vote Wednesday.

The number of shares withheld at the company’s annual shareholder meeting in Philadelphia – including those from a parade of public pension funds (See  Beleaguered Disney Head Tries to Shore Up Support ) – was higher than many had been expecting, according to news reports. It represented a victory of sorts for shareholder activists Stanley Gold and Roy Disney, former board members who have been leading a shareholder revolt against Eisner.

While Eisner’s job is in no immediate danger, the surprising depth of the protest vote could potentially lead to future board action, such as a separation of the chairman and CEO roles, both of which Eisner currently holds. Many of the protesting shareholders have pointed to the joint responsibilities as a reason for their dissatisfaction, news reports said.

“The shareholders have spoken,” said Angela Kohler, global media analyst with Federated Investors in Pittsburgh. “The number is large. This really puts pressure on the board to do something.”

The voting results are preliminary, with 43% of the votes cast in protest of Eisner. But those votes already represent 38% of Disney shares, so the final tally will likely be between 38% and 43% — far worse than any other executive has fared in a shareholder revolt, according to the news reports.

The meeting Wednesday lived up to its billing and quickly became a battle between Eisner and Roy Disney and Gold. Eisner has had a plethora of difficulties of late. In only the past few months, he’s had to fight off a hostile takeover bid by Comcast and defend himself against attacks after Pixar Animation Studios abruptly cut off its contract extension talks with Disney.

Disney stockholders were distressed by the breakdown of the Pixar talks. Pixar had provided some of Disney’s most successful movies in the past several years, including “Finding Nemo” last summer and the blockbuster “Toy Story” series.

Tense Atmosphere

Wednesday’s atmosphere inside the convention hall was tense. Eisner, sounding hoarse at times, was greeted with a smattering of applause while his foes, Disney and Gold, each received a standing ovation when they made remarks.

Against this backdrop, the centerpiece of the annual meeting was a shareholder vote widely seen as a proxy for the degree of support that Eisner retains to continue on at the top at Disney. Gold had predicted during the meeting that 40% of shareholders would register “withhold” votes against Eisner.

Gold, in his farewell as a board member, blasted Eisner and the board, saying: “Roy Disney and I have been on a mission …to save our company.” “Things will be different after today,” said Gold. He added that his and Roy Disney’s public fight against Eisner has “not been a pleasant experience for either of us.”

His voice dripping with sarcasm, Gold said that Eisner “never had a bad year,” as he blamed the Disney board for not holding Eisner accountable for Disney’s problems, according to news reports.


At a meeting late Wednesday following the shareholder meeting, Disney’s board decided to split the two roles, and voted unanimously to make presiding director and former senator George Mitchell the company’s non-executive chairman while voicing their continued approval of Mr. Eisner’s management and the company’s strategy, according to Dow Jones.

Michael Eisner agreed to step down as chairman of the Walt Disney Co., loosening his ironclad grip on the company he has led for 20 years. He will remain the company’s chief executive.