Power of suggestion: from Levy to Eisner, contemplating how the threat can be stronger than its execution.

• Author: Kaback, Hoffer
• Position: QUIDDITIES - Leon Levy, Michael Eisner

AT ALL POINTS of the compass, we espy fraud, or greed and cupidity, or--at best--woeful governance misjudgments.

To the north are Messrs. Kozlowski and Swartz, ex-high-fliers from Tyco. To the south, in view is just-indicted Bernie Ebbers of Worldcom. To the east, there parades before us the Rigas family of Adelphia (from Pennsylvania but currently on trial in New York City). To the west, we see not a "W" but the crooked "E" symbol of Enron.

To the northeast, we observe that the fight over ex-NYSE head Dick Grasso's compensation is just getting going. We'll soon learn how many lumens of candlepower will or will not be focused on the NYSE directors who approved his lavish compensation packages.

To the northwest, there is the Hollinger/Lord Black mess--a governance compost heap of heavy duty proportion. Across the seas, there are the sour Parmalat fraud and, east northeasterly, noxious fumes from Royal Dutch/Shell's overstated oil reserves.

Vis a vis this seemingly ever-expanding list of infamy, the struggle involving Disney is in a different category--one refreshingly clear of criminality (so far). Nominally centered in California, the epicenter of this battle temporarily switched in early March to Philadelphia, where the dissidents (Roy Disney and Stanley Gold) held a large rally cum meeting and the company its annual meeting.

The real Disney battleground, however, was and remains non-specific, geographically, because major combatants--including large state pension funds and proxy advisory firms--are spread nationally. Both sides assiduously wooed these voters; plainly, Disney CEO Michael Eisner failed to persuade.

A noteworthy facet of this situation is the applicability of the strategic principle that "The threat is stronger than its execution." In urging shareholders not to vote affirmatively for Eisner's re-election to the Disney board, the dissidents were not making a direct attack upon either his status as a director or his position as CEO. This is because (a) Eisner ran unopposed for re-election as a director and (b) shareholders in a public company do not have the power to elect (or to unelect) corporate officers.

Hence, no execution (in both senses of the word) was directly possible through the dissidents' "withhold" effort. Instead, that campaign contained the implicit threat that, under what almost certainly will shortly be new SEC rules creating a revamped proxy regime, a high-enough "withhold" vote percentage this year could...