Anti-Eisner Votes Total 43 Percent of Disney Shareholders

Walt Disney Co. (DIS) chief Michael Eisner (search) was rebuked by the stockholders Wednesday as 43 percent withheld their support for him in a vote at the company's annual meeting.

Stockholders have been grumbling that Eisner has mismanaged the entertainment company and presided over a slump in profits.

The size of the no-confidence vote was larger than many had expected, and represented a victory for Stanley Gold (search) and Roy E. Disney (search), former board members who have been leading a shareholder revolt against Eisner and have called for his ouster.

Eisner is running for re-election unopposed, so his job was in no immediate danger.

But the depth of shareholder dissatisfaction could lead to other steps, such as a separation of the chairman and CEO roles, both of which he currently holds, or possibly his ouster.

In his opening remarks, Eisner defended his 20-year record at Disney's helm.

"I love this company," Eisner said. "The board loves this company. And we are all passionate about the output of this company."

Eisner acknowledged the performance at Disney's ABC network was "disappointing," but said Disney has "the management skills and creative talent to continue its growth path."

Gold and Roy Disney went slightly over the 15 minutes they were allotted to present their case against Eisner, saying it was not sufficient for the company simply to split the roles of chairman and CEO.

"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."

Several major pension funds representing millions of Disney shares joined the disaffected camp, including the nation's largest public pension fund, which withheld its 9.9 million votes from Eisner.

"This discontent is too wide and way too deep in the marketplace, and it has led us to believe that Eisner should go and the board should get quickly to work on planning for an orderly transition," said Sean Harrigan, president of the board of administration of the California Public Employees Retirement System.

Eisner defended his management team: "Disney's record of creating value is indisputable. ... We are a very well-managed company."

Disney 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.

Charles Elson, director at the Center for Corporate Governance at the University of Delaware, called the 43 percent figure against Eisner a "phenomenal number."

"The board and Mr. Eisner have to step back following something as stunning as that," he said.

Disney's newly elected board, which met immediately after the shareholder meeting, must now interpret the depth of shareholder dissatisfaction. "They've got to do something," said Tom Wolzien, a media analyst at Sanford C. Bernstein & Co.

Disney is under intense pressure from state pension funds and proxy advisory firms to split the chairman and CEO jobs.

Meanwhile, Comcast Corp. (CMCSA), the cable television giant that last month made an unsolicited bid for Disney, urged the board to take a new look at the takeover offer.

"We think that a signal has been sent loudly and strongly to the Disney board and the Disney management that the shareholders continue to believe they haven't properly represented shareholders' interests in a variety of ways. One is the way they handled the Comcast proposal," said David Cohen, Comcast executive vice president.

Comcast said it would not sweeten the offer, originally valued at $54 billion.

Disney fell 11 cents to $26.65 Wednesday on the New York Stock Exchange (search).