- The management of the Walt Disney Company was reeling
last night after a raucous annual meeting in Philadelphia that saw a substantial
and angry minority of shareholders voting to oust Michael Eisner as chairman
and chief executive.
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- After a five-hour session, attended by 3,000 shareholders,
officials revealed that a resolution to reappoint Mr Eisner, the head of
Disney for the past 20 years, had scraped through. Of the votes cast, 43
per cent were in favour of forcing him from his job.
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- It was an unusual shareholders' revolt that leaves the
board of Disney in a quandary. In theory, the disquiet could have no effect
on the company, but it will be under pressure to respond either by sacking
Mr Eisner or stripping him of his chairmanship and signaling that he will
be replaced.
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- The result was a surprise for the company, which until
the meeting began had been suggesting that the vote against Mr Eisner would
surely not surpass the 30 per cent mark.
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- By contrast, Stanley Gold and the late Walt Disney's
nephew Roy Disney, who together led the Mickey Mouse mutiny, were celebrating.
Both resigned from the board last November.
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- The omens seemed bad from the moment the shareholders
crammed into the Philadelphia Convention Centre early in the morning. A
disembodied female voice told the crowd: "Attention. Attention. Please
be aware of all building exits." She was not addressing Mr Eisner
directly, but perhaps she should have been. She was followed by the Mary
Poppins number "A Spoonful of Sugar" (helps the medicine go down).
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- At times Mr Eisner struggled to keep the proceedings
under control. He seemed unable to silence one notorious shareholder, Evelyn
Davis, who repeatedly seized the floor to make often incomprehensible points.
It was another shareholder who screamed, "Sit down and shut up!"
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- Mr Eisner, 61, did his best to stress what was going
well with Disney now, not least a 60 per cent surge in its share price
since last year's annual meeting. "The magic is real, as it always
has been," he said. "I love this company. The board loves this
company. And we are all passionate about the output of this company."
His speech was met with polite applause from the front rows of the hall.
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- Yet, when he gave the microphone to his foes, Messrs
Gold and Disney, he visibly winced as the room broke out into significantly
louder applause, and some whistles and cheers. The pair had been given
15 minutes to put their case. They took rather longer, but no one was going
to complain, except for Mr Eisner.
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- "I believe," a testy Mr Eisner responded after
they had spoken, "you have just heard rhetoric from our critics, that
frankly replaces reason." What they had just stated, he added, was
"fundamentally wrong".
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- Their grouses are many, however. Since launching their
SaveDisney campaign three months ago, the two men have accused Mr Eisner
of stacking the company board with cronies, failing to nurture creative
talent at Disney, refusing to listen to any of his critics, and squeezing
profits by cutting budgets instead of increasing and improving content
and output. They, and investors, also know that until the Comcast bid surfaced
last month, Disney's stock was trading at the same level as six years ago
severely underperforming the rest of the market.
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- "Our mission has all along been [as] the bringers
of joy," declared Mr Disney, whose appearance at the microphone prompted
a third of the hall to rise to its feet. He described a management that
had become obsessed with branding the Disney name instead of honouring
it. "Branding is what you do when there is nothing original about
your product," he said to loud applause.
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- Mr Gold, who heads the investment portfolio of the Disney
family, told shareholders that he would accept nothing less than the sacking
of Mr Eisner and three other directors of the board. "While we the
shareholders watch our equity decline, Mr Eisner has never had a bad year,"
he said, prompting whistles of approval. "Michael Eisner must go now."
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- The trouble for Mr Eisner has snowballed. Last month,
his company was blindsided by an unsolicited takeover bid from America's
largest cable television provider, Comcast. While the Comcast assault may
not succeed, it was a signal that the market was smelling Disney's vulnerability.
Weeks before, Mr Eisner presided over the breakdown of the relationship
between Disney and Pixar Animation, the studio that produced blockbusters
including Toy Story and Finding Nemo.
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- The Pixar dÈb,cle persuaded many to join the anti-Eisner
rebellion. Most importantly, the pension funds of several large states,
including California and New York, decided before yesterday to withhold
support from Mr Eisner.
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- As one small shareholder noted, the battle over Disney
seemed to have become one of personalities rather than corporate vision.
Mr Disney, who draws support if only because of his sentimental link to
the company, glared poisonously at Mr Eisner across the hall yesterday,
daring him to turn off the microphone if he and Mr Gold overshot their
15-minute limit. And at a rally on Tuesday evening, Mr Disney seemed to
have gone a little too far when he said: "I used to say that if I
had enough rifles, we could have this thing over with." He added quickly:
"I guess I shouldn't have said that."
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- On the main stage, Mr Eisner defended his decision to
end the relationship with Pixar. "We can make a deal that fares great
on day one and on page one of the business newspapers, but only appears
on the obituary pages 365 days later," he said."Unwillingness
to listen is not the issue. It is the unwillingness always to agree that
is the issue."
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- Meanwhile,George Mitchell, the former senator who led
the peace negotiations in Northern Ireland and has served for nine years
on the board, laid out steps the company has taken to improve its self-governance
record. These have included removing directors beholden to Mr Eisner and
the company's management, and replacing them with outsiders.
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- Tuesday night's SaveDisney rally attracted other groups
interested in taking pot-shots at Disney, including the Christian Action
Network, which distributed material decrying the company's annual "gay
day" in June, when homosexuals converge on its theme parks. Befuddled
shareholders returned to their hotel rooms clutching videos entitled Gay
Day at Disney Gone Wild.
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- © 2004 Independent Digital (UK) Ltd
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- http://news.independent.co.uk/world/americas/story.jsp?story=497629\
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