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Disney looks high and low for new CEO
Chairman Mitchell responds to succession charges; Eisner receives overwhelming support.
February 11, 2005: 3:01 PM EST

NEW YORK (CNN/Money) - Walt Disney Co. chairman George Mitchell said Friday that the board is following through on its pledge to interview both internal and external candidates for the CEO position.

The remarks, made at Disney's annual shareholder meeting Friday morning, refute recent charges that Disney President Robert Iger is the sole candidate for the top job.

Earlier this week, longtime critics Roy Disney, nephew of founder Walt Disney, and Stanley Gold said they would withhold their votes on a new Disney board due to reports that directors have yet to interview any outsiders for the job.

In related news, preliminary shareholder vote results released Friday afternoon showed that CEO Michael Eisner was overwhelmingly reelected to another one-year term as a director. The 11 other Disney directors were also reelected, based on unofficial results. Eisner and the company's slate of candidates were supported by about 92 percent of shareholders, according to the preliminary result.

The support shown for Eisner Friday stood in stark contrast to last year's unprecedented no-confidence vote, when 45 percent of shareholders withheld their votes for him. Eisner was subsequently stripped of the post of chairman after 45 percent of shareholders withheld their votes for him. In September, Eisner announced he would retire by 2006.

Disney directors plan to announce a successor no later than June.

The board is "currently undertaking what could be its most important task," Mitchell told shareholders Friday. "We are confident that we're going to make a choice that is in the best interest of the company, shareholders and others."

Responding to criticism of the secrecy surrounding the CEO search, Mitchell said that the board was determined to keep the search process private. "We have repeatedly been advised that (a public search) will limit our choices and make is less likely that we can achieve our objectives," said Mitchell.

New Pixar deal unlikely

Investors aren't the only ones looking for clues about the next Disney CEO. Steve Jobs, CEO of partner Pixar Animation Studios (Research), said Thursday his company would wait until the next Disney CEO is named before picking a new distribution partner.

Together Pixar and Disney have produced a string of six blockbusters, including "Toy Story," "Finding Nemo" and "The Incredibles." But their co-production deal is set to expire in 2006, after the release of "Cars."

Under terms of the existing deal, Disney and Pixar co-finance movies and split the profits. Pixar now wants only to pay only a distribution fee, to keep the profits, and to own the rights to film titles. Disney currently has those rights.

Jobs abruptly broke off talks over a new distribution deal with Disney a year ago. Jobs and Eisner reportedly don't get along and the two recently traded barbs, with Eisner first calling Pixar's human animation figures "pretty pathetic" and Job responding by calling Eisner a "loose cannon."

On Friday, Eisner adopted a conciliatory tone, telling shareholders that Disney has a "tremendous amount of respect" for Jobs and "would love to continue" to do business with Pixar. But Eisner reiterated that the economics are holding up any deal and that Disney will push forward with its post-Pixar plans, which producing sequels to the existing Pixar films.

Paul Kim, a media analyst with Tradition Asiel Securities, put the odds of a new Disney-Pixar deal at "less than 50-50."

Pressure's off

Friday's shareholder meeting, held in Minneapolis, lacked last year's fireworks. Eisner's announced exit, combined with significant improvements in results at the company driven by improved theme park attendance and strong gains at ESPN and other cable networks, have taken some of the pressure off the current leadership.

But some investors and company critics remain wary amid the uncertainty over the CEO hunt and a new report that Eisner has expressed interest in being named chairman after giving up the CEO post. Roy Disney and Gold said they would like Eisner to step down earlier than the current 2006 plan.

CalPers, the California pension fund for state employees which controls 9.5 million Disney shares, also said it would not vote for Eisner, and has said Disney needs new leadership.

But a number of shareholders and investor groups that have been unhappy about Disney's leadership appear satisfied now.

Institutional Shareholder Services, which advises investors in proxy votes, endorsed the full board after recommending last year that Disney shareholders withhold votes from Eisner. And the Connecticut state treasurer and New York state comptroller, who last year publicly opposed Eisner, voted for him and other directors this time around, spokesmen for both agencies said.

Despite Mitchell's assurances that a full CEO search is underway, some analysts think the company's improved results will make it harder for the board to chose someone other than Iger.

"It's clear that outside candidates have a high hurdle, not just because of Iger, but because of how well the company has turned around," said Kim, media analyst with Tradition Asiel Securities. "The divisions under his supervision are driving the company now."  Top of page


Walt Disney Co.
Chief Executive Officers
Michael Eisner
Robert Iger
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