The Walt Disney Co. (DIS) plans to have a new chief executive by June.

The entertainment and media giant will include president Robert Iger (search) as the sole current employee in its CEO search, which will also consider outside candidates to replace Michael Eisner (search), who is retiring in 2006.

Iger "is an outstanding executive and the board regards him as highly qualified for the position," the board said Tuesday in a statement. "However, the board believes that the process should include full consideration of external candidates as well."

The board, which has been meeting for two days, said it has full confidence in Eisner and expects him to assist in the transition and remain with the company "through the rest of his tenure."

The board's statement is the first since Eisner said two weeks ago he would retire in 2006.

Disney critics and financial analysts have been calling on the board to be more specific about its succession planning efforts.

Board chairman George Mitchell (search) said a new CEO could be named sooner than next June and left open the possibility of Eisner leaving sooner.

"He will continue to be the CEO until such time the board determines it is appropriate for a new CEO to take office," Mitchell said in a conference call with reporters.

The board's announcement drew early praise from the proxy advisory firm of Glass Lewis & Co., which has been critical of Eisner and the board's independence in the past.

"This may be the first piece of encouraging news out of this board," said Glass Lewis chief executive Greg Taxin. "Finally, this board acting independently of Michael Eisner's stated wishes."

Taxin said the board's statement that Eisner would remain with the company during a transition might dissuade outside candidates who would want to start with a clean slate.

"Left unsaid here is whether they would relieve Michael of his duties prior to the end of his contract," Taxin said. "If they don't intend to do that, I think they've narrowed the field of potential candidates to one — Bob Iger."

Mitchell said the board will begin a search for his successor as chairman after it has named a new CEO. Mitchell will turn 72 next year — the board's mandatory retirement age. He said he will not stand for re-election at the 2006 annual meeting.

The announcement suggests Burbank-based Disney will continue to operate with a separate chairman and CEO, although Mitchell said that, too, could change.

Disney's board split the two posts in March after shareholders delivered a resounding vote of no confidence in Eisner by withholding 45 percent of their votes for his re-election.

In an interview with Fortune magazine, Eisner said he intends to step down from the board and will not seek the chairmanship when his contract expires in September 2006.

The statement from the board came on the 20th anniversary of Eisner's arrival at Disney.

The board noted that the company is on track to achieve earnings per share growth of more than 50 percent this year as well as record cash flow.

Disney's board also said its compensation committee has revamped its method of determining executive bonuses. The new method will more closely link compensation to performance.