Two Disney Dissidents Tone Down

The two former Walt Disney Co. directors who laid siege to the Magic Kingdom one year ago are keeping their powder dry for now.

Roy E. Disney and Stanley P. Gold said Tuesday that they would withhold support for the 12 directors standing for election at Disney’s annual meeting Friday in Minneapolis. The two complained that directors have dragged their feet in finding a successor to Chief Executive Michael Eisner.

But they also made clear their protest is muted this time around.

“We have not conducted a campaign to ask other shareholders to do the same,” they said in a statement.

That means Friday’s gathering won’t be anywhere near the raucous shareholder rebellion Gold and Disney led last March. Disney and Gold had successfully tapped into long-simmering shareholder frustrations over lagging earnings and stock price under Eisner. A 45% no-confidence vote on Eisner prompted directors to strip him of his chairman’s post.

This time, Gold and Disney lack much of the ammunition they had then. The company’s financial results and stock price improved markedly in 2004, causing investors to warm up to management.

“I don’t think anybody is in too much of a mood to wage another fight,” said Greg Taxin, chief executive of Glass Lewis, a proxy advisory firm that played a key role in last year’s battle.

Pension funds that played a major role in supporting the dissidents have been largely mollified, not only by Disney’s improved profit but also by the board’s promise to identify Eisner’s successor by June and initiate governance reforms.

Disney’s board scored additional points with investors by agreeing to permanently separate the roles of chairman and CEO, and by closely linking pay to performance.

Proxy advisory firm Institutional Shareholder Services, a significant ally to Disney and Gold last year, praised the board for steps it had taken and recommended support for all 12 directors.

The nephew of company founder Walt Disney, Roy Disney and longtime lieutenant Gold quit Disney’s board in protest in late 2003, launching their anti-Eisner campaign. The 30 million shares that Roy Disney’s family controls make it one of the company’s largest shareholders.

Disney and Gold contend they are holding their fire to give the board a chance to demonstrate that it can conduct an impartial search for Eisner’s successor.

“In recent months the board has been saying the right words,” the men said in a statement. “We now await its actions.”

But Gold and Disney suggested they may run out of patience.

“The board’s credibility is in question due to reports that they have yet to interview a single outside candidate,” they said.

Disney officials declined to comment. Chairman George J. Mitchell has promised investors a fair and thorough search.

Wall Street has made Disney President Robert Iger, the only internal candidate, the early favorite.

Iger has aggressively courted investors and has seen his stock rise in recent months with the improvement in Disney’s finances and the ratings of the long-suffering ABC television network that he oversees.

Disney and Gold have made no secret of their opposition to Iger, viewing him as Eisner’s lieutenant who lacks the vision and creative acumen to lead the Burbank entertainment giant.

“It would be a mistake to reward Iger with the job of CEO because he has demonstrated nonperformance,” Gold said last fall.

On Tuesday, however, they stopped short of singling out Iger as an issue for the annual meeting.

“You add up the number of people who’ve gone on the record in support of Bob, it would have been difficult to focus a no-vote on Iger at this point,” said Patrick McGurn, senior vice president of Institutional Shareholder Services.

Investors said they believed that reluctance also may stem from fears that an unsuccessful campaign would squander the support Disney and Gold previously earned.

“They did the shareholders a lot of good last year,” said Richard Moore, state treasurer for North Carolina, whose pension fund owns more than 3.3 million shares. “I don’t think they are going to burn that goodwill lightly.”

As such, the two have been unusually quiet in the weeks leading up to the meeting, unlike a year ago when they crisscrossed the country campaigning against Eisner.

Roy Disney and Gold do complain with a daily update on their SaveDisney.com website about the decision to schedule the annual meeting in frigid Minneapolis, where the company has broadcast operations. A better choice, they argue, would have been sunny Orlando or Anaheim, home to Disney’s theme parks.

Come Friday, Gold, Disney and other shareholders will be “chilling in the Twin Cities,” where, they note, it was 23 degrees Tuesday. As for the relations between the company and its dissident ex-directors, they continue to be frosty as well.