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Eisner foes prepare for "round two"

"Welcome to 'Round Two' in the fight for Disney!" declares Roy Disney in his latest posting on savedisney.com. The nephew of company founder Walt Disney says he and fellow ex-director Stan Gold are in the fight for the long-haul and aren't appeased by Disney's board merely taking the Chairman title away from Michael Eisner, who remains CEO (3/4/04 TVBR Daily Epaper #44).

"Stanley and I are grateful to all of you for your support and encouragement in what we are now calling 'Round One' of the battle to remove Michael Eisner from his position - - any position - - at the Walt Disney Company," Roy Disney said to supporters.

Following last Wednesday's vote, in which shareholders gave Eisner an unprecedented 43% no-confidence vote, the only action taken by Disney's board was to separate the roles of Chairman and CEO and elect former Sen. George Mitchell as the company's non-executive Chairman. According to Roy Disney and Gold, that was "a blatant rejection of shareholder will, a betrayal of trust and a significant backwards for substantive governance reform in America's capital markets."

"This Board just doesn't get it. Once again, we see half measures, cosmetic changes and poor choices," the two charged.

What's next? Eisner is still on the job, despite a shareholder revolt that has many on Wall Street thinking that his departure is certain, with only the timing in doubt. Roy Disney and Gold aren't tipping their hand on what they'll do next, but they do have some options. Major shareholders, including huge public pension funds, are already demanding that the Disney board assert more independence and, at the very least, begin work on a formal succession plan. The largest pension fund of all, Calpers, went further, demanding that Eisner be given his walking papers by the end of this year.

If the SEC ratifies a pending rule, which is likely, Disney will be required to offer three candidates nominated by shareholders at next year's board election, alongside the nominees chosen by management. Based on last week's election results, Eisner would be the member most likely to lose his seat in such an election.

But even before that, Roy Disney and Gold can make life even more miserable than it is already for Eisner and his backers on the board. They can file lawsuit after lawsuit demanding public disclosure of internal board documents. And if they think they can line up enough votes - - just a few more than were on their side last week - - they could launch a shareholder consent solicitation to remove select members or the entire Disney board.