PHILADELPHIA (AP) — The Walt Disney Co.’s board voted late
Wednesday to split the roles of chairman and chief executive, hours
after shareholders delivered a stinging rebuke by withholding 43
percent of their votes for CEO Michael Eisner’s re-election to the
board.

Beth Dykstra
Roy Disney, nephew of Walt Disney, enters a news conference after shareholders voted to withhold support of Disney chairman and CEO Michael Eisner. (AP PHOTO)

Disney directors voted unanimously at the company’s annual
meeting to make board member George Mitchell the company’s new
chairman and voiced their continuing approval of Eisner’s
management and the company’s strategy.

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 and Roy Disney, 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 and said they would withhold
their approval from Eisner and several board members. Eisner
defended his management team. “Disney’s record of
creating value is indisputable. … We are a very well-managed
company,” he said.

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.”

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

Meanwhile, Comcast Corp., 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.

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