BRERALEX
That's a wrap.
- Joined
- Mar 8, 2001
- Messages
- 917
Campaign to Oust Disney's Eisner Mulls Next Move
Thu Mar 11, 5:27 PM ET
By Peter Henderson
LOS ANGELES (Reuters) - The next step in the campaign to unseat Walt Disney Co. Chief Executive Michael Eisner may be a tough one.
The board stripped the chairmanship from Eisner last week after a massive protest vote by shareholders at the annual meeting, but directors said they unanimously supported the 20-year veteran and kept him as chief executive.
For dissidents focused on ousting Eisner altogether, the board action fell short, leading former board member Roy Disney to promise a "round two" of his fight.
Roy Disney revved up the process on Thursday, asking supporters to e-mail Eisner and the board telling him to leave.
One of the most dramatic gestures would be to return to investors with a proxy-style campaign to unseat some directors, a grass-roots effort called a consent solicitation that if successful could be the fastest way to force change.
But it is also seen as a high-stakes, expensive gamble.
Stanley Gold, Roy Disney's ally, has said dissidents can pressure the board through the media, direct communication by shareholders, and through legal means, attempting to expose board communications that Gold says would be embarrassing.
Next year dissidents could nominate directors, perhaps directly on the Disney ballot, depending on regulatory reform.
But since only the board can replace the chief executive, to force change in the top seat, shareholders must change directors' minds or change the board itself.
Gold and Disney have also raised the possibility of going back to shareholders between annual meetings with a consent solicitation that could be aimed at unseating some directors, adding new ones, or similar measures.
It would not be easy though.
"The prospects for a consent solicitation seeking a majority of outstanding stock to replace this board are bleak," said Greg Taxin, chief executive of Glass Lewis, a shareholder adviser that recommended voting against Eisner.
"I would be surprised to see them launch such an uphill battle," he said.
After Comcast Corp's bid for Disney was rejected by the board, there was some speculation the cable operator would use a consent solicitation to nominate a board that would approve the deal, but that has not happened.
Disney shareholders cannot call special meetings, but they can use a consent solicitation to force change by gathering the support of a majority of all shares.
To do so they would have to wage a proxy-style battle at a time of year when investors do not expect one, and it would cost millions of dollars, if not tens of millions, analysts say. The threshold for victory is also higher than at annual meetings, where a majority of shares voted is enough to approve most issues. For a consent solicitation a majority of all shares is required within a 60-day period.
The 43 percent of shares voted against Eisner last week amounted to only about 37 percent of all outstanding shares.
Beth Young, a consent solicitation expert at the Corporate Library, said some shareholders who made the symbolic move of opposing Eisner, who was guaranteed reelection, would be much more cautious about a more radical move.
"I think there is a sense that they (dissidents) have the wind at the back, that they have some momentum, but that may not reflect the reality of the voting situation," she said.
Thu Mar 11, 5:27 PM ET
By Peter Henderson
LOS ANGELES (Reuters) - The next step in the campaign to unseat Walt Disney Co. Chief Executive Michael Eisner may be a tough one.
The board stripped the chairmanship from Eisner last week after a massive protest vote by shareholders at the annual meeting, but directors said they unanimously supported the 20-year veteran and kept him as chief executive.
For dissidents focused on ousting Eisner altogether, the board action fell short, leading former board member Roy Disney to promise a "round two" of his fight.
Roy Disney revved up the process on Thursday, asking supporters to e-mail Eisner and the board telling him to leave.
One of the most dramatic gestures would be to return to investors with a proxy-style campaign to unseat some directors, a grass-roots effort called a consent solicitation that if successful could be the fastest way to force change.
But it is also seen as a high-stakes, expensive gamble.
Stanley Gold, Roy Disney's ally, has said dissidents can pressure the board through the media, direct communication by shareholders, and through legal means, attempting to expose board communications that Gold says would be embarrassing.
Next year dissidents could nominate directors, perhaps directly on the Disney ballot, depending on regulatory reform.
But since only the board can replace the chief executive, to force change in the top seat, shareholders must change directors' minds or change the board itself.
Gold and Disney have also raised the possibility of going back to shareholders between annual meetings with a consent solicitation that could be aimed at unseating some directors, adding new ones, or similar measures.
It would not be easy though.
"The prospects for a consent solicitation seeking a majority of outstanding stock to replace this board are bleak," said Greg Taxin, chief executive of Glass Lewis, a shareholder adviser that recommended voting against Eisner.
"I would be surprised to see them launch such an uphill battle," he said.
After Comcast Corp's bid for Disney was rejected by the board, there was some speculation the cable operator would use a consent solicitation to nominate a board that would approve the deal, but that has not happened.
Disney shareholders cannot call special meetings, but they can use a consent solicitation to force change by gathering the support of a majority of all shares.
To do so they would have to wage a proxy-style battle at a time of year when investors do not expect one, and it would cost millions of dollars, if not tens of millions, analysts say. The threshold for victory is also higher than at annual meetings, where a majority of shares voted is enough to approve most issues. For a consent solicitation a majority of all shares is required within a 60-day period.
The 43 percent of shares voted against Eisner last week amounted to only about 37 percent of all outstanding shares.
Beth Young, a consent solicitation expert at the Corporate Library, said some shareholders who made the symbolic move of opposing Eisner, who was guaranteed reelection, would be much more cautious about a more radical move.
"I think there is a sense that they (dissidents) have the wind at the back, that they have some momentum, but that may not reflect the reality of the voting situation," she said.
