- The Washington Times - Thursday, March 4, 2004

PHILADELPHIA — The shareholders of the Walt Disney Co. have spoken. But what exactly did they say?

The answer to that question remained vague yesterday, a day after a stunning 43 percent of Disney’s shareholders withheld their votes for Michael Eisner at a marathon annual meeting.

Disney’s board reacted quickly, stripping Mr. Eisner of the title of chairman and giving it to board member George Mitchell. Mr. Eisner remains chief executive officer.

The action, which included the board’s unanimous endorsement of Mr. Eisner’s strategic plans for the company, pleased few and left many wondering just what had changed at Disney.

In the aftermath of the contentious meeting, Disney executives were flying back to their headquarters in Burbank, Calif., and dissident shareholders were resuming their own lives, both thinking they were victorious.

Ex-board members Stanley Gold and Roy E. Disney also flew back to California to plan their next move.

Their three-month campaign to oust Mr. Eisner reached a fever pitch Wednesday when they took the stage at the Pennsylvania Convention center to confront him, and the two have said they would not be satisfied until Mr. Eisner left the company.

With shares of Disney trading higher yesterday, analysts and industry observers are left wondering whether Mr. Eisner can lead Disney until his contract expires in two years, or if the board’s move will be enough to fend off further assaults from dissidents as well as cable giant Comcast Corp. It made an unwelcome bid to acquire the Magic Kingdom.

“Disney is not a broken company,” said Richard Greenfield, an analyst at Fulcrum Global Partners.

“The question is: What was the message investors were trying to send and how did the board react? Those are still open questions.”

Shares of Disney rose 3 cents at $26.64 yesterday on the New York Stock Exchange.

Mr. Greenfield said late Wednesday he believed Comcast would seek to take advantage of the Disney decision to leave Mr. Eisner in power, particularly if Disney’s stock dropped and Comcast rose yesterday.

But with both stocks gaining, Mr. Greenfield and other analysts are left scratching their heads.

“If the stock keeps trading up, they will probably feel vindicated and they made the right decision,” Mr. Greenfield said, speaking of Disney’s board. “If the stock trades down, then they will have some explaining to do.”

Some analysts believe Disney’s board will examine the messages sent by groups who withheld their votes for Mr. Eisner and other board members Wednesday, then respond to those concerns individually.

If those concerns cannot be satisfied with the current arrangement, then Disney’s board will start thinking about replacing Mr. Eisner.

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