Once again there's discontent brewing at Disney (DIS), though it's a much milder strain than the one that nearly tore the media company apart last winter.Disgruntled former directors Roy Disney and Stanley Gold said Tuesday they would withhold their votes for board members at the company's annual meeting this week. But unlike last year, when Gold and Disney spearheaded a no-confidence effort targeting certain Disney board members, the two ex-directors said they hadn't conducted a campaign to ask other shareholders to withhold their votes for the complete slate. The announcement, combined with relatively muted criticism of Disney's board from other quarters, heralds a Disney annual meeting likely to be less contentious than the splenetic scene that unfolded at last March's annual meeting in Philadelphia. At that meeting, an unprecedented 45.2% of votes were withheld for CEO Michael Eisner's re-election to Disney's board. That vote led to Eisner's replacement as chairman by then-presiding director George Mitchell, who had received a 25.6% "withhold" vote himself. This year's meeting is slated to start at 11 a.m. EST Friday at the Minneapolis Convention Center. In their statement Tuesday, Disney -- the nephew of Disney founder Walt -- and Gold said their vote this year rests on the question of whether Disney's board has adequately addressed the issues raised by the no-confidence vote at last year's meeting. The key to answering whether the board has reformed itself, say the ex-directors, lies in how it conducts and implements the search for Eisner's successor as CEO. The board
"The board has set a deadline of June 2005 to select a successor," say the ex-directors in their statement. "Until we see that this board has faithfully discharged its duties in this most critical of board functions, and that Mr. Eisner steps down as CEO and as a member of the board upon the culmination of the process in June, we are WITHHOLDING our vote. "In recent months, the board has been saying the right words," conclude the ex-directors. "We now await its actions." The only confirmed candidate to succeed Eisner is President Bob Iger, who Disney's board said was the only Disney employee in the running. At a meeting with analysts last week, Mitchell -- who plans, in accordance with Disney's retirement policies, to step down from the board in 2006 -- told analysts that the board approaches its determination of a successor "in good faith, with open minds." Said Mitchell, "There has been no prior determination; there are no preconditions." Gold and Disney aren't the only parties to the Disney shareholder vote who have turned down the volume on their criticism of board members. Proxy advisory firm Glass Lewis is recommending that shareholders vote for the Disney board's slate with the exception of Mitchell. Echoing statements from last year, when Glass Lewis argued that Mitchell wasn't independent "in the true spirit of independence," the firm now says, "His entanglements with Mr. Eisner and his rejection by shareholders at last year's annual meeting made him, in our view, perhaps the worst choice for the position of chairman." Last year, Glass Lewis recommended withhold votes for Eisner, Mitchell and a third director. Institutional Shareholder Services, which last year recommended a "no" vote for Eisner, is recommending votes for all directors this year. ISS, however, is recommending a vote in favor of a shareholder resolution prohibiting greenmail payments, in conflict with the board's recommendation.
According to a report in The Wall Street Journal, Disney has already
succeeded in keeping off shareholder ballots a proposal urging the company to make it easier for certain shareholders, under certain circumstances, to nominate a limited, competitive slate of board candidates. Disney shares rose 8 cents to $29.96 Tuesday.