Friday, March 5, 2004

Critics: Disney needs a broom


Mitchell seen as Eisner Lite

By Lisa Singhania
The Associated Press

NEW YORK - The Walt Disney Co.'s dissident shareholders gave a chilly reception Thursday to George Mitchell's appointment as chairman, saying the selection of the longtime board member proves nothing has changed at the embattled media giant.

Mitchell got the job late Wednesday after the Disney board, reeling from a contentious shareholders meeting, decided that it was no longer appropriate for chief executive Michael Eisner to also serve as chairman.

The board chose Mitchell, a former U.S. senator and diplomat, as a replacement - despite the fact that almost a quarter of shareholders had voted Wednesday against re-electing him to the board.

That decision outraged critics, who think that Mitchell has done a poor job of speaking out against management.

"The board is thumbing their nose at shareholders," said Greg Taxin, chief executive of Glass, Lewis & Co., one of the institutional investment research firms that had recommended withholding support from Eisner and Mitchell. "The notion that someone with a 24 percent withhold vote should be elevated to the role of chairman is a sad and laughable result."

Disney had come under fierce attacks in recent months from shareholders angry about the company's mixed financial results and what they perceived as its disregard for their rights. The dissatisfaction snowballed after two former directors, including the nephew of Walt Disney, mounted a campaign to oust Eisner, Mitchell and three other members of the board for poor performance and failing to make corporate governance reforms such as separating the chairman and chief executive positions.

Although Eisner was the chief target, Mitchell was also criticized for what some viewed as his too-cozy relationship with Eisner. Mitchell and Eisner are old friends, and Mitchell had previously been a consultant for Disney. He served nine years on the board and was its presiding independent director.

"He's going to have to convince shareholders something new and meaningful has occurred here - and that's going to be difficult with a board that has virtually the same composition and the same apparent leadership" as before, Peter Clapman said. He is a senior vice president and chief investment counsel at retirement system TIAA-Cref.

Mitchell, who declined to comment Thursday, has repeatedly expressed his support for Eisner and the board. In a March 2 editorial in the Wall Street Journal, he said he considered his role as presiding director a "special responsibility" but noted that, "It is not the job of the board to run the company. That is the job of management."




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