As Protest Grows, Eisner Gets Vote of Confidence

Walt Disney Co. Chairman Michael Eisner got a vote of confidence from New York City pension funds Friday, but funds in North Carolina and Ohio said they would not vote for him as a director of the company as part of a widening protest over his management.

The decision by officials to support Eisner with the 7.6 million Disney shares for New York City police, fire, school and municipal workers was the first bit of good news for the executive in a week that saw the protest vote gain significant momentum leading up to the company’s annual shareholder meeting Wednesday in Philadelphia.

“These investors clearly recognize that Disney is on track for earnings growth from continuing operations in excess of 30% this year and double-digit growth through 2007,” Disney spokeswoman Zenia Mucha said.

This week, officials representing such major Disney investors as California public employees, California teachers and New York state employees funds said they would withhold votes from Eisner and other directors, citing long-standing criticisms of Disney’s performance and the tight grip Eisner has historically exercised over the company.

Although Eisner’s reelection as a director is assured because he is unopposed, dissidents hope that the protest will force directors to hasten his retirement. Disney officials privately predict that 30% or more may withhold votes.

The New York City announcement followed the disclosure that 2.1 million shares held by North Carolina public pensions funds would withhold votes for Eisner.

Also, the State Teachers Retirement System of Ohio said it would withhold votes on its 3.9 million shares for Eisner and all other directors. The Ohio Public Employees Retirement System plans to decide by Monday. Eisner had visited Ohio this week to make his case.

“The decision is intended as a vote of ‘no confidence’ against the current Disney management and board,” the Ohio teachers pension fund said in a news release.

Disney’s Mucha declined to comment on the decisions by the Ohio and North Carolina state funds, other than to reiterate its previous statements that “Disney’s record of building value is indisputable” and that it “is a well-managed company with world-class governance.”

Separately, Disney sources confirmed that Disney director George J. Mitchell was approached by intermediaries for Comcast Corp. before the cable television giant launched an unsolicited $49-billion takeover bid this month.

The sources said that they conveyed the cable company’s interest in buying Disney but that Mitchell expressed no opinion and told them they would have to follow proper procedures.

High-profile analyst Richard Greenfield of Fulcrum Global Partners in a report this week said Comcast executives believed that Mitchell and other board members were interested in working with Comcast to combine with Disney and bring in new management.

But Mucha dismissed the report.

“This is far from quality research,” she said. “It’s based on rumors that have been categorically denied on the record.”