Vote Momentum Against Disney's Eisner

By Peter Henderson

LOS ANGELES (Reuters) - Another activist pension fund, North Carolina, on Friday joined at least seven states opposing Walt Disney Co. Chairman Michael Eisner's reelection to the board next week as Disney signaled it did not consider the vote a sweeping referendum on Eisner's stewardship.

Disney, braced for 30 percent of shareholders to oppose Eisner, also on Friday launched full-page advertisements in major newspapers featuring Mickey Mouse and Kermit the Frog and declaring "Our future is in good hands."

The 11-member Disney board is guaranteed to be reelected at the March 3 meeting, since there are no rival candidates, and so the battle is brewing whether to interpret a substantial percentage of votes withheld for Eisner as a call for him to step down or a less direct signal about corporate governance.

Nell Minow, a governance analyst at the Corporate Library, said the vote would send a message to Comcast and other potential buyers. "The higher the vote of no confidence, the more vulnerable the company is," she said.

Smith Barney analyst Niraj Gupta argued in a note that Comcast could resubmit its $48 billion bid or sweeten it slightly by adding or substituting a cash component to the all-stock offer.

"We believe that Comcast would cite the shareholder vote as evidence that a management change is in order," he wrote.

The Comcast offer is now worth about $3.20 per share less than Disney's shares are trading on the New York Stock Exchange, although the discount has narrowed from $3.60 in mid-February, when Disney rejected the bid. Comcast's all-stock offer represented a 10 percent premium when it was made.

State funds opposed to Eisner hold at least 40 million shares, about 2 percent of Disney stock, and many more are still making decisions.