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Last Updated: Thursday, 4 March, 2004, 09:36 GMT
Q&A: Walt Disney's travails
Michael Eisner
Eisner faced a particularly humiliating shareholder revolt
Walt Disney shareholders at the company's annual general meeting dramatically ousted Michael Eisner from his position as chairman. He will be replaced by former United States senator George Mitchell but will keep his position as chief executive.

BBC News Online looks at how the struggle developed and what is likely to happen next.

Will Michael Eisner's departure from the chairmanship be enough to placate shareholders?

One of the big criticisms had been that Mr Eisner had too much power as chairman and chief executive of the company.

Accordingly, the job will now be split. He will still remain in the chief executive role but George Mitchell, who brokered the Good Friday agreement in Northern Ireland, will take over as chairman.

But shareholders are saying this solution is not acceptable as Mr Mitchell has been closely involved with existing Disney policy.

Rearranging the board may just increase the demand for more change, so Mr Eisner may yet be forced to walk the plank.

However, a brand as successful as Disney, is expected to keep going despite knocks.

Disney has said in a letter to shareholders that it expected "double digit compound growth in earnings through at least 2007".

Why did Michael Eisner face a revolt?

Disney chairman Mr Eisner, 61, has been accused by investors of poor management and bad strategic thinking.

Critics say he is responsible for reduced turnover and profits, and has left the company vulnerable to a hostile takeover by US cable TV giant Comcast.

He has also been criticised for overspending on theme-parks, which are underperforming, as well as for his recent failure to renegotiate Disney's distribution deal with leading computer animation firm Pixar.

There are also a number of people who simply do not like Mr Eisner.

His autocratic "gulag" style of management grates on many, in particular traditionalists who remember the company's roots as a family business.

His huge payouts to top executives have been highly controversial, often obliterating the good he has done the company.

What problems does Disney face at the moment?

Disney still makes a lot of money - $1.27bn in 2003 to be precise - but profits are nevertheless dwindling.

The fiercely independent company deeply resents the hostile takeover approach last month from Comcast.

The cable-television operator made an initial informal offer to purchase Disney for a deal worth $66bn (35bn) which if accepted would have created the world's biggest media firm.

There is also the question of how Disney will survive without Hollywood animator Pixar, which ended its distribution deal with the company in January.

Pixar had argued that it should keep a greater share of the profits and pay a lower distribution fee but Disney rejected the call, saying that would cost it hundreds of millions of dollars in lost revenues.

The theme parks recently brought up by Disney - which are underperforming as a result of the 11 September attacks, the company says - are also threatening to become a liability in future.

Who was behind Mr Eisner's departure?

The call for Mr Eisner to resign was first made by former Disney directors Roy Disney, nephew of founder Walt, and Stanley Gold, who both resigned from the board last year.

The pair have continued their campaign, attacking Mr Eisner in a recent Financial Times article for the lack of transparency at the company and the overly generous bonuses he awarded to top executives.

"The winds of transparency" had not yet blown through Disney despite the recent big financial scandals such as the collapses of Enron and WorldCom, the former directors alleged.

Pension funds also called for Mr Eisner to go which is a major public relations blow for the chief executive.

Their call was supported by investment adviser Glass Lewis which votes on behalf of shareholders and has said Disney's board "has been notoriously insular, famously gullible and blindly loyal" to Mr Eisner.

At the company's annual meeting, 43% of shareholders withheld their votes during Mr Eisner's re-election to the board. A number of barbed comments from investors were also thrown in his direction.




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