Disney's Eisner Vows to Stay Despite Vote

Despite a shareholder revolt that led him to lose the chairmanship of The Walt Disney Co., Michael Eisner vows that he will stay on as CEO through the end of his term in 2006.

"My intention is definitely to serve that term out to its completion," Eisner told Nightline's Ted Koppel in his first interview after the Disney board voted to split his dual job title of chairman and chief executive, which he had held for 20 years.

The board made former Sen. George Mitchell, a member of Disney's board, the company's new chairman, effective immediately.

The directors voted unanimously for Mitchell, a former U.S. senator from Maine, but in a statement reiterated their approval of Eisner's management and the company's strategy.

Earlier Wednesday, 43 percent of shareholders who voted at the company's annual meeting withheld their support for Eisner. The number of shares withheld was higher than many had been expecting, and represented a victory for shareholder activists Stanley Gold and Roy E. Disney, former board members who have been leading a shareholder revolt against Eisner.

The duo called the shareholders' vote "unprecedented in American corporate history" and called again for the board to oust Eisner. "After today's mandate, the board can no longer ignore the will of its shareholders," they said in a statement after the result of the vote was announced.

Merrill Lynch analyst Jessica Reif Cohen said today that the moves might not be enough to quiet the shareholder unrest.

"In light of the shareholders' vote, we believe this may not be enough to satisfy shareholders," she said. "This may also prompt the Board to more forcefully pursue a replacement/succession plan for Mr. Eisner as CEO. It is clear to us that the Board resoundingly supports Mr. Eisner. Should the Board 'do nothing' following this vote, we believe that shareholders will place Mr. Eisner as well as the Board on a very short 'leash.'"

Eisner was running for re-election unopposed, so his job was not in immediate danger. He told Nightline Disney and Gold created "a groundswell with their rhetoric" among the shareholders, but said the Disney board was not swayed by the two men's arguments.

Disney and Gold had earlier said they would not be satisfied if Eisner lost just one of his titles.

The shareholders' vote also sparked renewed interest by Comcast Corp., the nation's largest cable company. It called on the board to reconsider its $49 billion all-stock takeover bid, which was rejected earlier as too low. Comcast did not raise its offer, and the Disney board reiterated that it was inadequate and would not benefit shareholders.

"It's not going to happen because their proposal is the exact same proposal they already offered us, which our board rejected," Eisner told Nightline.

Earlier at the annual meeting with thousands of shareholders at the Philadelphia Convention Center, Eisner defended his 20-year record to those anxious to hear him outline management's plan for continued earnings and stock growth.

"I love this company," he said. "The board loves this company. And we are all passionate about the output of this company."

Gold and Disney went slightly over the 15 minutes they were allotted at the meeting to present their case against Eisner, saying it was not sufficient for the company simply to split the roles of chairman and CEO.

"Michael Eisner must leave now," Gold told the shareholders. "We see today's meeting as a first step toward saving the company … We are seeking real and meaningful change."

Eisner acknowledged that the performance at Disney's ABC network was "disappointing," but he also told the shareholders that Disney has "the management skills and creative talent to continue its growth path."

He had previewed his pitch to shareholders in an interview published Wednesday in the Washington Post.

Eisner told the newspaper Disney is in "fabulous shape." He said that that despite 9/11 and the build-up to war with Iraq, "we maintained a good balance sheet, we slimmed down, we kept the spirits up inside the company. We managed through crisis."

In fact, the company's fortunes have improved over the past year. After several years of decline, the stock price and earnings are rebounding, climbing back to levels seen in the late 1990s.

For the men behind the very public campaign to oust Eisner, the improvements of the past year are unimpressive. Roy Disney and Gold have campaigned for Eisner's resignation since they both quit the board late last year. Disney is the nephew of the company's founder and Gold is his financial adviser.

The two men have said they are unhappy with the company's return for shareholders and place the blame squarely with Eisner. Gold recently told ABCNEWS that "over the last seven or eight years he has underperformed. He chases away creative people. He has no strategic vision and the stock has languished."

This is the message the pair brought to the overflowing crowd of shareholders who gathered at the "Save Disney" counter-meeting held Tuesday across the street from where the Disney company held its official meeting.

Gold and Roy Disney asked shareholders to vote to "withhold" on the Eisner nomination as a signal to the board that it is time for a change at the top. They were counting on the support of more than 16 large pension funds, which own a substantial amount of Disney stock, and were hoping to get at least 30 percent voting "withhold."

Disney is the parent company of ABCNEWS.com.

ABCNEWS' Ramona Schindelheim contributed to this report