Angry Roar by Disney Investors

Toward the end of a marathon, unusually contentious annual shareholder meeting in Anaheim on Tuesday, Walt Disney Co. Chairman Michael Eisner was asked about one issue he wasn’t expecting: Why are the lights in Disneyland’s Pirates of the Caribbean ride so dim?

“That was the first question I’ve liked all day long,” Eisner quipped, adding: “It will be so bright you won’t believe it.”

For Eisner, the question was one of the few softballs in a day of hardball. Put on the grill in front of shareholders, the man who leads what is arguably the world’s most successful entertainment enterprise was subjected to an unusually harsh skewering--and even occasional catcalls and boos--from stockholders demanding that he justify his rich contract and huge payout to departed President Michael Ovitz.

A short drive from Disneyland, “the happiest place on earth,” the meeting at the Pond arena at times seemed to be the unhappiest place in Anaheim. In a setting unusual for any corporate annual meeting--the home of Disney’s Mighty Ducks hockey team--the meeting attracted 12,000 stockholders, probably a U.S. corporate record.

In the end, the dissidents lost and Eisner and Disney’s directors won shareholder support on every issue before the meeting--but without the kind of near-unanimous vote of confidence companies usually get at annual meetings. Institutions sent a strong message by withholding nearly 13% of their votes for five Disney directors elected. A revised bonus plan for Eisner was approved with about 12% of the shares cast against it or abstaining. Resolutions calling for the monitoring of sweatshops and tying corporate pay to social issues were defeated.

Other complaints included one from an early arriving shareholder that she had to relieve herself in the Pond parking lot because she couldn’t get in to use a bathroom. Mostly, however, stockholders vented their anger at Eisner over his own lucrative pay package--experts give it an estimated current value of $250 million and say it could potentially be worth hundreds of millions more--and the staggering cash-and-stock severance deal given Ovitz. The Ovitz deal is worth $96 million and potentially could go higher if Disney’s stock continues to climb.

“Disney is adding to the polarization of our society,” said Al Appel, a retired Huntington Beach carpenter who helped build Disneyland. “They need to spread the prosperity around.”

Disney’s meeting marked Eisner’s first appearance before shareholders since the Ovitz debacle. He used the opportunity to make an extraordinary public mea culpa in describing how he eventually had to pull the plug on the man he long considered his best friend when he realized Ovitz’s hiring wasn’t working out.

“Not good. . . . A mistake. . . . Won’t happen again,” Eisner said, adding, “The cost to the company, as high as it was, would have been much higher if we had stayed the unstayable course.”

The Ovitz payout has become a watershed event for stockholder rights groups and has hurt morale throughout Disney from the highest executive levels on down. Some employees even showed up at the meeting to complain to Eisner.

Eisner said Ovitz was paid so much to leave Disney because the company believes in honoring contracts. The company had to lure Ovitz with such a generous contract because he was a prized executive at the time, Eisner said. Ovitz had built the most successful talent agency in Hollywood history and was earning about $25 million a year.

At one point, Eisner let surface some of the anger he harbors about the episode when he advised one of the stockholders peppering him with questions: “Be angry. Be annoyed. God knows I am.”

Eisner and other corporate officials defended his own large contract by arguing that it is largely based on the performance of Disney stock. If the company does poorly, his pay is modest.

The meeting featured the first private preview of an evening news broadcast when Peter Jennings, anchor of ABC’s “World News Tonight,” hooked up live with ABC President Robert Iger to fill him in on the stories ABC was working on.

Disney’s meeting also was one of the longest ever: more than 4 1/2 hours without a break, about the combined length of two recent Disney movies, “The English Patient” and “Ransom.” It also was no doubt the chilliest meeting ever, set on a thin carpet covering the ice that the Ducks skate on.

Shortly after 10 a.m., Eisner began the proceedings. From the outset, it was clear that he and Disney had prepared an elaborate counterattack to any criticism. Eisner began by introducing board members, who critics contend are unusually cozy with Disney through personal relationships with the company and Eisner. One by one, Eisner detailed specific qualifications for each and how their expertise benefits the company, as if to justify each director’s reason for being on the board.

Eisner reminded the crowd that Disney was nearly dismantled by corporate raiders in 1984, and introduced the company’s “white knight,” Texas billionaire Sid Bass. He also introduced legendary investor Warren Buffett, whose Berkshire Hathaway owns 24 million shares. Buffett later gave a spirited defense of Eisner during a brief talk to the crowd.

The first half of the meeting was a lengthy celebration of Disney. Using video highlights and a batch of graphs and charts, Disney executives made the case that the company far outperforms rivals, and they showed no hesitation to criticize competitors. At one point, Eisner noted that rival Time Warner’s lagging stock hasn’t risen “in a millennium.”

Only passing reference was made to Disney’s biggest problem with its $19-billion acquisition of ABC: the network’s lagging prime-time schedule. Instead, the emphasis was on the success of cable sports network ESPN, also acquired in the deal. Indeed, the company formally announced that its first ESPN store will open soon in Glendale.

Disney also took considerable heat from groups who believe that the company uses Haitian sweatshops to make Disney clothing, something Disney Senior Executive Vice President Sanford Litvack denied.

Still, Ruth and Ted Shapin of Orange showed up carrying homemade placards protesting Disney’s alleged exploitation of Haitian garment workers. Labor watchdogs say those workers toil in unsafe sweatshops sewing licensed Disney clothing, for which they are paid less than 30 cents an hour.

“It’s all about corporate greed,” said Ruth Shapin, 66. “Either they should keep the jobs here in the U.S. or pay a living wage to the Haitian workers. It’s truly a moral issue.”

By early afternoon, most of the shareholders had left the meeting. Not all had come to vent their complaints. Brandie Ledesme brought her two young sons, 7-year-old Andy and 4-year-old Isaac, even though it meant missing school and leaving their Loma Linda home at 6:15 a.m. Disney stockholders who attended the meeting were rewarded with free passes to Disneyland.

“Hey, it’s worth it when you consider that it costs more than $100 to get our family into the park,” Ledesme said. “I just hope we don’t have to stick around for the whole thing.”

Times staff writer Marla Dickerson contributed to this story.