Walt Disney Co.'s critics on Thursday urged the company's board to plan for a successor to Chief Executive Michael Eisner, calling his removal from the chairmanship a cosmetic change that ignored an unprecedented shareholder protest.
Investors also debated whether Comcast Corp's $49 billion takeover bid would gain momentum after the Disney board unanimously backed Eisner's leadership as CEO, and he made it clear that he would stay on until his contract expires in 2006.
Calstrs, the nation's third-largest public pension fund, also urged the creation of an unusual committee of investors that would monitor Disney's reform efforts, potentially giving Eisner's critics a way to keep the heat on.
"The board needs to move from Fantasyland to Tomorrowland," said Connecticut Treasurer Denise Nappier, who called on Disney's board to focus quickly on succession planning for both top management and directs.
Disney's shares rose slightly, a day after its board separated the roles of chairman and chief executive, which had both been held by Eisner. That move came after 43 percent of votes at Disney's annual meeting were cast against Eisner's reelection to the board.
The board retained Eisner, who has led the company for almost 20 years, as chief executive and said it supported him unanimously.
Eisner was replaced as chairman by George Mitchell, previously Disney's presiding director, who polled a 24 percent opposition vote at the meeting.
Nappier stopped short of calling for Eisner's or Mitchell's ouster, saying the board had put itself in an untenable position by not looking for replacements ahead of the vote.
"They were really caught with their pants down," she said. "You can't replace somebody with nobody, so I'm not sure they had many options," she added, saying Mitchell could prove to be a place holder while the board looked for a new chairman.
The board has repeatedly said it has succession plans, but on Wednesday it gave no hint of further personnel changes, saying that while it recognized some shareholders wanted Eisner to go, it was sure Disney's performance would validate its decision.
A majority of Disney's top 10 institutional shareholders supported Eisner.
"Disney's shareholder meeting showcased a lively management team invigorated to drive strong operating results, and a vigilant board intent on improving corporate governance," Smith Barney analyst Jill Krutick said in a note written before -- and predicting -- the split of CEO and chairman jobs.
But the California State Teachers Retirement System, part of the bloc of state pension funds with about 2 percent of Disney shares that opposed Eisner, on Thursday backed a proposal by state Controller Steve Westly to create a group of investors to watch over the board, including its audit and compensation committees.
Former Disney directors Roy Disney, the nephew of the company's namesake, and Stanley Gold, who have led the revolt against Eisner, called for Eisner to go and said they would maintain their campaign.
"This board doesn't get it. Once again we see half measures, cosmetic changes and poor choices," they said.
The dissidents could bring lawsuits to force the publication of board documents intended to show the board's lack of independence or launch a consent solicitation that would be a grass-roots style effort to change part or all of the board. They have not laid out a plan of action, though.
They could also run a slate of their own candidates for Disney's board next year. The company slate won an automatic reelection this year because their were no rival candidates.
Disney and Gold argue that Eisner's ouster also will boost the Disney stock price beyond Comcast's ability to pay, although other shareholders have said that firing Eisner would create a further opening for Comcast.
A Comcast company source has said the cable operator has no intention of raising its bid, but not all investors think Disney has seen the last of Comcast.
"Unless Comcast was pulling some kind of a stunt here, which is unthinkable to me, there has to be an Act Two to this thing," said Steven Cohen, chief investment officer for New York-based hedge fund Kellner DiLeo Cohen & Co., which owns Disney shares but none of Comcast.
Knox Fuqua, a fund manager at the AAM Equity Fund, which owns Disney stock, called the changes so far "the worst Band-Aid I have ever seen in a corporation."
"What this does is open the door for other people to look at Disney," he said.
