Institutional revolt threatens to unseat Disney chief

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The Independent Online

More than half of Walt Disney's institutional investors have indicated they will vote against the embattled entertainment group's chairman and chief executive this week.

Michael Eisner faces a battle to stay at the helm at Disney's annual shareholder meeting on Wednesday, and Comcast, the cable group, could raise its $60bn (£32bn) hostile bid for Disney to take advantage of his weakness.

Ex-directors Roy Disney - nephew of Walt and a 1 per cent shareholder - and Stanley Gold are leading the revolt. They accuse Mr Eisner of poor stewardship of the company, packing the board with cronies and failing to disclose conflicts of interest. The disclosure issue is being probed by the US Securities & Exchange Commission.

Two influential investor advisory firms - Institutional Shareholder Services and Glass Lewis & Co - are lining up against Mr Eisner. ISS advises over 30 per cent of Disney's shareholders and Glass Lewis around 15 per cent. And though there is some overlap between them, it is clear that institutional shareholders speaking for around two fifths of Disney's stock will vote against Mr Eisner.

Greg Taxin, the chief executive of Glass Lewis, believes Mr Eisner will not be able to survive such a vote. He pointed out that as more than a third of Disney's stock is held by small investors, a majority of institutional shareholders would be voting against him.

Recently, when 30 per cent of investors voted against the re-election of Steve Case at Time Warner, he resigned.

Mr Eisner has shown little sign of giving in to pressure and Disney spokespeople have attacked the shareholder groups directly. Zenia Mucha, a senior spokeswoman, said of ISS: "We find its position inexplicable and unjustified with respect to Michael Eisner, since he led the very changes that resulted in a board dominated by independent directors." On Glass Lewis she was even more hard line, describing it as an "an upstart company that is trying to grab publicity".

Despite the barbs, Mr Eisner joined Roy Disney in a conference call debate hosted by Glass Lewis last week, during which he was roundly attacked by investors.

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