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Eisner May Drop Chairman Post but Continue as Chief Executive

The move would come as he faces a bitterly contested shareholder vote. George Mitchell may replace him.

March 03, 2004|James Bates and Richard Verrier | Times Staff Writers

PHILADELPHIA — The City of Brotherly Love became the venue for a nephew's scorn as Walt Disney Co. insiders said Tuesday that Michael Eisner may step down as chairman of the board but remain chief executive.

The company's expected move to split the two jobs -- an abrupt reversal of position -- comes as Eisner faces a bitterly contested shareholder vote on his reelection to the board of directors. The campaign against Eisner is being led by former director Roy E. Disney, the nephew of company founder Walt Disney.

Although running unopposed, Eisner could be wounded if a substantial percentage of shareholders, perhaps 30% or more, withhold votes from him.

Sources close to the board said former U.S. Sen. George Mitchell, now Disney's presiding director, would be the leading candidate to replace Eisner as chairman.

The election tally is set to be announced toward the end of Disney's much-anticipated annual meeting here today. The board is then expected to convene later in the day to discuss Eisner's future -- though it may not take immediate action.

Word of the board's plan to sever the chairman and chief executive positions was immediately condemned by Eisner's critics, who say he should also be ousted as CEO. They accuse him of tarnishing Disney's finances and image through poor management of such assets as the ABC television network and the once-powerhouse animation unit.

Roy Disney and fellow former director Stanley P. Gold spent much of Tuesday debunking the plan to split Eisner's titles as "spinning" by the company -- an eleventh-hour attempt to grapple with the growing challenge to Eisner's leadership. The two men, who are championing the opposition movement, accuse the board of trying to shift the debate from Eisner's failures to his job title.

"We need to find him a new job in a galaxy far, far away," Roy Disney said. Other powerful shareholders, including the California Public Employees Retirement System, agree that nothing less than Eisner's exit is needed to fix the company.

Seven blocks from Independence Hall, about 1,500 shareholders waited throughout the afternoon in a block-long line to hear Gold and Disney compare their efforts to the city's earlier quest for liberty.

"After all, what we are involved with here is a fight for our rights, the fight against the tyranny of a dysfunctional management and an ineffective board," Gold said.

At the same time across the street, Disney President Bob Iger fired back during a brief press conference.

"Over the past few months, a campaign of disinformation and distortion has been waged against us," Iger said. "Tomorrow at our shareholders meeting we are going to set the record straight."

Disney executives say Eisner and his team have turned the company around, with strong growth predicted for the next three years.

The crowd of dissidents that showed up Tuesday to hear Gold and Disney remained unpersuaded.

Freelance animator Bill Moore of New York hoisted a sign with a picture of Michael Eisner as Frankenstein and the words "Dump Mike" as he waited to get inside Loews Philadelphia Hotel. There, two ballrooms overflowed with shareholders in what resembled a revival meeting for the Disney of old.

Orange and purple goodie bags containing blue "" T-shirts, notepads and "Goodbye Michael" bumper stickers were handed out by workers in red T-shirts.

A giant screen flashed inspirational quotes from Walt Disney and a series of historic clips. Roy Disney, wearing a Mickey Mouse tie, was greeted with a standing ovation.

Earlier in the day, Gold and Disney met with more than 150 members of the media, vowing that regardless of the outcome, their campaign would remain alive until Eisner's departure.

"We're not going away until Mr. Eisner's gone,'' Gold said.

Their criticisms ranged from the mundane (not replacing lightbulbs and cleaning bathrooms at the theme parks) to the specific (earnings are no better than they were in 1998) to the philosophical ("The company doesn't know who it is," Roy Disney said).

Three Disney public relations executives attended the dissidents' meeting -- and were escorted from the ballroom.

Roy Disney and Gold also said that an unsolicited takeover bid by Philadelphia-based cable operator Comcast Corp., while too low to be acceptable, shows how vulnerable Disney has become under Eisner. Disney's board has rejected the offer.

In his press conference across the street at the Convention Center, Iger, surrounded by life-size statutes of Mickey Mouse in various costumes, said the criticisms were baseless.

He noted that Disney's stock price was up 60% in the last year and that the company was poised to see a 30% increase in earnings per share in 2004. He noted a recovery is underway at Disney's theme parks and consumer products unit, while its studio continues to prosper.

"We have fantastic creativity," Iger said. "That is the result of great management."

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