Disney Directors Reiterate Support for Eisner

In the face of investor complaints about management, Walt Disney Co.’s directors emerged from a two-day retreat Tuesday with a ringing endorsement of Chief Executive Michael Eisner and his lieutenant, President Robert Iger.

The board also spelled out expanded duties for its new chairman, George Mitchell, and vowed that the former U.S. senator would head an effort to develop and review its succession plan for Eisner.

Though the board didn’t make any decision about extending Eisner’s contract -- which expires in September 2006 -- it did begin the process of evaluating possible internal candidates to fill the top job, a source with knowledge of the talks said. The source said the board had for now decided to consider only candidates who work for Disney.

The question of who will succeed Eisner and when has long been a concern among investors and gained urgency last month after shareholders delivered a stinging rebuke of his leadership at the firm’s shareholder meeting in Philadelphia. The protest vote against Eisner was 45.4%, while Mitchell was hit with a 25.7% vote of no-confidence.

The board subsequently stripped Eisner of his chairman’s title, elevating Mitchell to that role. Eisner has led Disney for 20 years.

Dissident shareholders cited what they described as the company’s lackluster financial results and poor strategic decisions. Despite recent financial gains, the company’s earnings and stock price have changed little in the last seven years as it has struggled to fix problems in its ABC-TV network and core feature animation division.

On Tuesday, the board sought to assure investors that Disney’s problems were behind it.

“The board continues to have complete confidence in Michael Eisner, Bob Iger and the senior management team and in their strategic growth plan to continue to strengthen the company’s position as the leader in quality family entertainment,” the board said in a statement.

The directors sat through two days of presentations by senior business executives across various business units, including Anne Sweeney and Stephen McPherson, new top executives at ABC tapped last week in a management overhaul.

The purpose of the presentations was to give directors a chance to learn about Disney’s business strategies and also to evaluate the executives, the source said.

At the retreat in Burbank, directors unanimously endorsed expanding Mitchell’s duties. He will, for example, have the ability to convene board meetings, establish the board agenda, coordinate the board’s performance review of the CEO and other senior officers and communicate with shareholders.

“I will work diligently in fulfilling these responsibilities,” Mitchell said in a statement.

The board’s actions are being closely watched by cable giant Comcast Corp., which is weighing whether to keep its unsolicited $54-billion offer to buy Disney on the table. Disney’s board rejected the offer last month as too low.

Disney’s shares fell 20 cents to $24.18 on the New York Stock Exchange.