By Ron Grover
For its next movie, perhaps Disney ought to consider The Incredible Shrinking Michael Eisner. In contrast to 2004's raucous Walt Disney (DIS ) annual meeting -- when 45% of shareholders voted against Eisner's reelection to the board -- the Disney CEO largely shunned the limelight as the company met with its shareholders on Feb. 11 in Minneapolis.
The voter revolt in Philadelphia last year resulted in Eisner relinquishing his chairmanship to George Mitchell, the former U.S. Senator from Maine. This year, Mitchell ran the two-hour session. Rather than engaging in the quick-witted banter with shareholders during question-and-answer that he was known for in past meetings, Eisner shared lesser amounts of on-stage time with Disney President Robert Iger.
The duo spoke from matching lecterns early in the meeting, tag-teaming updates on how Disney units were performing. Later, they sat in director chairs as Mitchell conducted the 45-minute Q&A period. "Quite a difference from last year," observed former Disney board member Roy E. Disney, who sat in the audience. He helped stoke the revolt that prompted mass demonstrations outside the Philadelphia meeting last year. "I'm not surprised that he took a back seat," Disney added.
Indeed, the powwow was designed mostly to show that Disney was in the midst of an orderly transition from the Eisner era. Mitchell stressed repeatedly that the board was searching for Eisner's successor and intended to have a new top executive in place no later than June.
He went to great lengths to stress that Iger was not the lead candidate, as rumored recently. "We're approaching this decision in good faith and an open mind," he said. "We have no prior determinations and preconceived notions."
Yet, the annual get-together seemed at times like something of an audition for Iger, the sole internal candidate to succeed Eisner, who announced last September that he intends to retire when his contract expires on Sept. 30, 2006.
The board in late January whittled a list of potential candidates down to about a dozen, including such media heavyweights as News Corp. (NWS ) President Peter Chernin and Viacom (VIA ) Co-President Leslie Moonves. It's expected to begin interviews with them soon.
On to business: The 12-person Disney board was elected by a comfortable 92.2% vote -- quite a mandate compared to last year's battle. About the only unusual occurrence was a shareholder resolution, proposed by longtime corporate gadfly Evelyn Y. Davis, that Disney not accept "greenmail" payments in the future. Mitchell said the company was working on a similar policy statement of its own and that Davis' proposal, which passed with 56.4% of the votes, was one that it intended to adopt.
When he did get to speak, Eisner stressed Disney's remarkable growth since he took over in September, 1984, pointing out that its revenues had risen in that period from $1.5 billion to more than $30 billion, and operating income from $98 million to $2.3 billion. "It has now been 20 years since I put on my first Mickey tie, and I believe the prospects for this company have never been better," he said.
Eisner added that Disney is still discussing the future of its Miramax studio with founders Harvey and Bob Weinstein, who have said they want to leave. "But we own that company. They're just employees like I am," said Eisner, who oversees the studio.
He said Disney is pressing ahead with its own computer-generated films, including this year's Chicken Little. However, it would like to continue a relationship with Pixar (PIXR ), the hit-making animation studio. Pixar execs have said they want to leave Disney after delivering a final film, Cars, next year. But Disney retains the rights to make sequels from Pixar's existing films, including Toy Story 3, which it intends to release in 2008, Eisner said.
It fell to Iger, however, to describe some of the sweeping new initiatives for the future, including business-development plans in India and China plus technology platforms such as wireless devices. "The intersection of great content with far more versatile immersive mobile platforms will provide great growth opportunities for us," said Iger.
Disney reported that 2004 earnings were up by more than 85%, and it projects double-digit growth "through at least 2007," according to Disney Chief Financial Officer Tom Staggs. Moreover, Staggs said the stock has been among the media industry's strongest performers for the last year, although it's still around its 1997 levels.
At least the recent raucous controversies are in the past.
Grover is BusinessWeek's Los Angeles bureau chief