Roy Disney Urges Vote Against Eisner

On the same day Walt Disney Co. disclosed that Chairman Michael Eisner received a $6.25-million stock bonus for the company’s improved performance, Roy E. Disney called on shareholders to cast a vote of no confidence in the top executive.

In an open letter to shareholders, the former Disney board member and nephew of the company’s founder Tuesday urged shareholders to oppose reelection of Eisner and three other directors, saying the board has “failed to hold management accountable” for Disney’s lackluster growth in the last decade.

Eisner and board members George Mitchell, Judith Estrin and John Bryson “symbolize, respectively, the poor management, poor governance, poor compensation practices ... that are impeding the development of long-term shareholder value,” Roy Disney wrote in a letter cosigned by Stanley Gold, his lieutenant and a former board member. The men resigned last year after a bitter falling-out with Eisner and are waging a campaign to oust him.

The letter was posted on their website, SaveDisney.com, and will be mailed to shareholders in advance of the March 3 annual meeting in Philadelphia.

Disney dismissed the letter, saying it was full of inaccuracies aimed at misleading investors.

“We trust and respect that the shareholders will distinguish between truth and fiction,” spokeswoman Zenia Mucha said. “The value that has been created for shareholders has been and continues to be delivered by an Eisner-led management team.”

Disney and Gold concede that the letter is largely symbolic -- there is little chance of ousting Eisner because they are not putting up an alternative slate. The letter, they say, lays the groundwork for an ongoing campaign against management.

“We think we can send a message that shareholders are dissatisfied with both Michael’s performance and the board’s,” Gold said.

Although rare, such no-confidence-vote actions can be effective. Former AOL Time Warner Inc. Chairman Steve Case gave up his job in May 2003 after he was reelected with an unusually small majority of votes.

Since their resignations, however, Disney and Gold have struggled to win over major investors to their cause, in large part because the company’s earnings and stock price have improved, driven by a strong showing at the box office.

Citing the better results, Disney disclosed Tuesday that Eisner and Disney President Robert Iger received deferred stock grants of $6.25 million and $1 million, respectively, in fiscal 2003. Iger also received a $4-million cash bonus and a salary of nearly $1.4 million. Eisner’s base salary is $1 million.

However, in their letter, Disney and Gold complain that the improvements are short term and the company’s track record in the last decade has been weak.

Also in its proxy statement, Disney said it was in talks with the Securities and Exchange Commission to possibly settle an investigation into whether it properly disclosed relationships involving the company and the relatives of board members.

Disney has previously disclosed that three board members, including Gold, had children who worked for Disney, while a fourth (Bryson’s wife) works for an affiliate.

Disney shares fell 24 cents to $24.16 on the New York Stock Exchange. The stock jumped 43% last year after declining for five consecutive years.