Roy Disney steps up efforts against Eisner


LOS ANGELES - Walt Disney Co. ex-directors Roy Disney and Stanley Gold said yesterday that they would begin meeting immediately with representatives of institutional investors, stepping up their campaign to oust chief executive Michael Eisner from the board.

Roy Disney said in an interview that when he meets with Institutional Shareholder Services, the largest adviser to fund managers on proxy votes, he will say Eisner has mismanaged Burbank, Calif.-based Disney. Roy Disney and Gold said they plan to meet with as many as 50 shareholders before the company's annual meeting March 3 in Philadelphia.

The former directors are encouraging proxy advisers, including Glass, Lewis & Co., to recommend that their investor clients withhold support in a shareholder vote of reappointment of Eisner and three other directors. If enough investors decide not to vote for Eisner, it would be a blow to the chairman and chief executive, who has run the company since 1984.

"Essentially, it's a vote of no confidence," said Greg Taxin, chief executive of San Francisco-based Glass, Lewis. "It will lead to directors taking their fiduciary duties more seriously or in some cases stepping down."

At Disney's annual meeting, Eisner and the other directors are running unopposed and can't be forced out so long as each receives some votes. Disney spokesman John Spelich didn't immediately return phone calls seeking comment.

"We're meeting with everyone," Gold said in the interview.

Roy Disney and Gold have criticized Eisner for failing to revive the third-rated ABC television network and for alienating creative business partners. In a letter to investors last week, they faulted him for falling theme park attendance. Two days later, Pixar Animation Studios said it wouldn't renew its partnership with Disney, which has produced hit films including Finding Nemo.

Roy Disney, nephew of company founder Walt Disney, held 17.3 million shares of Disney and was the 17th-largest shareholder as of August. He and his family trust agreed in August to sell 43 percent of their stake, or about 7.5 million shares. Roy Disney left the board after the company said it would enforce an age limit on directors that would make him ineligible to serve.

Disney's board room rules prevented Roy Disney and Gold from speaking with media, shareholders and proxy advisers while they were still directors. The two resigned last year and have faulted Eisner for, among other things, poor corporate governance.

Last week, Roy Disney and Gold also asked investors to withhold votes from three other directors: former U.S. Sen. George Mitchell, Packet Design Inc. Chief Executive Officer Judith Estrin and Edison International CEO John Bryson.

Eisner, Mitchell, Estrin and Bryson symbolize "the poor management, poor governance, poor compensation practices and lack of board independence that are impeding the development of long-term shareholder value," Roy Disney and Gold said in their letter to shareholders.

Shareholders' incentives to oust Eisner may be diminishing, as Disney shares have risen 3.6 percent since Roy Disney and Gold began their campaign in December. The company's fiscal fourth- quarter profit more than doubled, to $415 million from $175 million a year earlier, because sales increased at the Disney studios and cable networks.

Roy Disney and Gold, who pushed to install Eisner as Disney's leader in 1984, now say that investors should pay attention to the company's 55 percent decline in share price since an all-time high of $43.63 was touched in 2000.

Disney's shares fell 20 cents to close at $23.80 yesterday on the New York Stock Exchange. The shares rose 43 percent last year. Shares of Pixar fell $1.76 to $64.63 in Nasdaq stock market trading.

Eisner and Robert Matschullat, a Disney board member and head of the audit committee, already have met with Institutional Shareholder Services, said Patrick McGurn, a vice president at the Rockville-based firm. He said that meeting took place before Roy Disney and Gold issued their call to reject Eisner and the three other directors.

"We'll have to see if Disney wants a rebuttal meeting or conference call" after the firm meets with Roy Disney, McGurn said.

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