Vote Momentum Against Disney's Eisner

DISNEY SEES PROTEST OVER DUAL ROLES

A Disney source said that the company was prepared for more than 30 percent of shareholders to withhold their votes for Eisner and that the company saw the signal as a protest, largely inspired by adviser Institutional Shareholder Services, against his combined roles of chairman and chief executive.

Board member Judith Estrin made similar arguments in interviews with major newspapers. The board has not wavered from its public support of Eisner and his strategy for keeping Disney an independent content company focused on household names that range from Mickey Mouse to ESPN, and now include the Muppets after a recent acquisition.

Minow put the influence of ISS at around 10 percent of votes and said the board had wide latitude to interpret and respond to the results of the vote, including simply stepping up communication with investors.

A majority of the 11 board members up for reelection face protest votes or recommendations against them from two major shareholder advisers, major pension funds, or dissidents Roy Disney and Stanley Gold.

The board has reformed its governance rules over the past few years, although critics say Eisner still has too much power and that more reform is needed.

North Carolina Treasurer Richard Moore said on Friday that his state pension funds would withhold votes for Eisner as chief executive and chairman -- although he is only up for reelection to the board -- and withhold votes for the three audit committee members.

"As one of the most visible companies in the country Disney's management needs to be more responsive to its owners. The failure of the company to generate long-term value for shareholders combined with their past inattention to good corporate governance practices has forced us to take this step," he said in a statement.

Disney shares lost 20 cents or less than 1 percent to end at $26.53 on the New York Stock Exchange on Friday.