Walt Disney's powerful chief executive officer Michael Eisner was forced last night to hand over the chairman's title to George J. Mitchell, in order to placate a rising tide of shareholder resentment over what they see as his imperious management style and a poor company performance.The embattled Eisner was put on the spot yesterday as he defended his 20-year record in front of shareholders atyesterday's stormy annual meeting in Philadelphia as calls for his departuregathered pace.
As many as 43% of shareholders withheld their support for Eisner, representing a stunning vote of no-confidence and something of a coup for the men who oppose him, former board membersStanley Gold and Roy E Disney.
While Eisner'sre-election run was unopposed, his position as both chairman and chief executive officer became untenable for the board, which actly quickly to quell the storm. His contract expires in 2006.
Whether this will be enough to assure Eisner sees out his contract remains to be seen. Corporate governance groups are unlikely to be satisfied by the choice of Mitchell, a former senator from Maine, as chairman since he is a longstanding friend of Eisner's. Indeed, shareholders also withheld 24 percent of their votes from his re-election Wednesday - the second highest total after Eisner.
Addressing his shareholders, Eisner acknowledged a disappointing performance at ABC but praised his management team and said Disney had what it took to ensurecontinued corporate growth.
"I love thiscompany," Eisner reportedly said. "The board loves this company.And we are all passionate about the output of this company."
Eisner has takenheat for Disney's stock performance, the poor shape of the company's ABCnetwork and what many believe to be a bungled distribution arrangement withPixar Animation, the white hot creative team behind Oscar winner FindingNemo and other hitsincluding Monsters, Incand Toy Story. Relations with Miramax co-chairmen Harvey and Bob Weinstein are also said have been strained over their contract renewals.
"Michael Eisnermust leave now," Gold said. "We see today's meeting as a first step towardsaving the company... We are seeking real and meaningful change."
A number ofpension funds representing millions of Disney shares also said they wouldwithhold approval for Eisner.
They includedCalpers, the nation's largest pension fund that owns more than 9.9millionDisney shares, which took the unprecedented step of calling for Eisner'sresignation by the end of the year.
In the midst of all this, the Disney board yesterday reiterated their rejected of Comcast's recent takeover bid. "Our belief in the company's strategy, financial results over the last several quarters, and the level of earnings and improved returns we expect going forward make us confident that results will validate our judgment on the quality of our management team," the board said in a statement.
Disney shares fell10cents to $26.66 on the New York Stock Exchange.