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Disney meets, but without fireworks

With Michael Eisner's fate sealed at last year's raucous annual meeting, today's is likely to be more a look to the future.

LOS ANGELES - When shareholders of the Walt Disney Co. gather in Minneapolis today, they will hear the company tout its solid financial performance over the past year, its rising stock price and rosy outlook for double-digit growth in the future.

Yet hanging over the meeting will be echoes of the troubles that roiled last year's shareholders meeting in Philadelphia, when investors delivered a stinging vote of no confidence to CEO Michael Eisner, who later relinquished his role as board chairman.

In contrast to last year, most proxy consulting firms have endorsed Disney's board and lauded the company for its corporate governance strides.

And while many state pension funds that opposed Disney's board last year will support it this year, the country's largest fund, representing less than 1 percent of Disney's shares, will oppose it.

"Things are definitely calmer," said Janna Sampson, director of portfolio management for Oakbrook Investments, which owns about $24-million worth of Disney stock.

Yet just in time for the meeting, a hefty new book, written with Disney's cooperation, paints an unflattering portrait of Disney CEO Michael Eisner and his heir apparent, president and chief operating officer Bob Iger.

DisneyWar, by James Stewart, shows Eisner unsure about the qualifications of his second-in-command and Iger complaining about a lack of visibility in the company.

"No one takes me seriously," Iger said to one executive outside of Disney, according to the book. Iger's comment came in the midst of his effort to turn around Disney's ABC network, which was fourth in the ratings and, according to the book, Eisner's growing impatience with that effort.

Stewart is a former reporter at the Wall Street Journal, where he won a Pulitzer Prize for his stories about insider trading. He is the author of several books, including Den of Thieves and Blood Sport, a book about the Clintons and the Whitewater investigation. He was given access to top Disney executives over a two-year period in the writing of the book.

DisneyWar is filled with stories of company intrigue and gossipy tidbits, such as a scene caused in a restaurant when Iger confronted former ABC chief Lloyd Braun. Iger soon fired Braun, then fired co-ABC head Susan Lyne after promising that her job was safe, according to the book.

The book also has Eisner grousing about the prospects of the ABC show Lost, even though the show premiered with high ratings and critical praise.

As is the case with such books that attempt to recreate actual incidents and conversations based on hundreds of interviews, Stewart notes that passages of dialogue "are not necessarily a quotation from an interview with me." He cautions that readers should not assume that people quoted in the book are direct sources.

The book also retells the contentious relationships Eisner had with former studio chief Jeffrey Katzenberg and short-term Disney president Michael Ovitz. Many of those details were painstakingly revealed last year during a shareholder lawsuit that saw days of testimony from Eisner and Ovitz.

While draft copies of the book have been circulating in entertainment circles and the book is sure to generate juicy stories, analysts say it will have little or no effect on the search for a new CEO.

Eisner has said he will step down when his contract expires in 2006. Disney's board has pledged to name his successor by June.

Iger is expected to take a lead role at today's shareholder meeting, giving him a high-profile platform in the months before the board's June target date.

This year's meeting promises to be quieter than last year's, when dissident ex-board member Roy Disney took the stage to enthusiastic applause and directly challenged Eisner's leadership.

This year, Roy Disney and fellow ex-board member Stanley Gold decided not to nominate a challenge slate of directors. They recently said they would withhold their votes from the company's director nominees to keep pressure on the board to conduct a thorough search for a new CEO. But the pair have not mounted a campaign to persuade others to do likewise.

And influential proxy consulting firms, which last year recommended withholding votes from Disney's board, this year recommend supporting board members, including Eisner.

"The fact that the company has taken positive steps is a gain for shareholders," a report prepared by Institutional Shareholders Services said.

Yet critics remain.

The California Public Employees Retirement System said Wednesday it would withhold its votes from Eisner.

And the proxy firm Glass Lewis & Co. has recommended withholding votes for board chairman George Mitchell's re-election.

The firm said Mitchell's prior work as a consultant to Disney compromised his independence.

[Last modified February 11, 2005, 00:51:12]