The tension surrounding the future of The Walt Disney Co. remained high last week as angry shareholders and the Disney board geared up for a protracted battle over the future management-and ultimately ownership-of the entertainment company.
“Obviously, we took [the shareholder vote] very seriously,” Disney President Robert Iger said during an investors conference in Florida last week. “We are well aware that there is a significant amount of shareholder discontent about the company’s performance and that management is not being held accountable enough. The board came away from Philadelphia and the annual shareholders meeting with an appropriate understanding of what is going on. Not in any way are we making light of it.”
But Mr. Iger’s comments are not likely to quell angry shareholders, who continue to want CEO Michael Eisner out. That sentiment took on even more meaning when the daughter of Walt Disney weighed in on the matter, calling on Mr. Eisner to step down.
Meanwhile, dissident shareholders led by former board members Roy Disney and Stanley Gold promised to keep the pressure on the board to oust Mr. Eisner, saying the decision earlier this month to strip Mr. Eisner of his title as chairman was insufficient. While continuing its public campaign the anti-Eisner group is exploring legal options to force Mr. Eisner out, in what Mr. Disney is calling “Round Two.”
Disney’s board late last week was in the throes of renegotiating Mr. Eisner’s contract to reflect his new role. The revisions, which reportedly don’t include adjusting his $1 million annual base salary, were necessary because Mr. Eisner’s current contract, which expires in September 2006, allows him to quit if he loses the chairman title.
However, the board and Mr. Eisner both want the executive to stay on to maintain stability in the face of the $54 billion hostile takeover bid launched by Comcast last month.
At the same time, the board is sorting out the chairman’s and CEO’s roles in light of the split of the titles and in anticipation of the day successors to Mr. Eisner and newly appointed Chairman George Mitchell are named. Many observers believe Mr. Eisner is unlikely to finish out his term, given the mounting pressure, and board rules mandate that Mr. Mitchell, who is 70, resign as a director at age 72.
All of this unrest within the company is likely to strengthen Comcast’s position, some Wall Street analysts have suggested, as the company bides its time. Comcast President Brian Roberts, speaking at the same investor conference at which Mr. Iger made his comments, indicated he could as easily sweeten the offer as walk away at this point. “This is not something we have to do,” Mr. Roberts said. “If it doesn’t happen, life goes on.”