STATUS QUO; DISNEY SHAREHOLDERS FAIL TO FORCE REORGANIZATION.

Byline: Dave McNary Daily News Staff Writer

Walt Disney Co. shareholders gave Chairman Michael Eisner lackluster support Tuesday with an unimpressive level of opposition to a resolution that would have forced major changes to Disney's board.

More than 35 percent of shares voted to back the proposal by the College Retirement Equities Fund, which contends only three of the company's 16 board members are independents. CREF, and those who voted along with the fund, say the other 13 have close ties to Eisner and management.

Had the resolution passed, the Burbank-based entertainment giant would have been faced with kicking out as many as six board members to meet the requirement that the majority of the panel be independent.

Most analysts had expected CREF's resolution would receive less than 20 percent support among those voting at Disney's annual shareholders meeting in Kansas City, Mo. CREF, which owns 1 percent of Disney shares outstanding, said the 35 percent support was the highest ever for such a measure targeting a major corporation.

``The support for the resolution is far better than anyone thought it would do since there are a lot of big shareholders who automatically support Eisner,'' said Desmonde Printz, an analyst with New York-based pension fund adviser Proxy Monitor. ``This is a shot in the arm for improved corporate governance.''

Disney had attacked the measure, saying 60 percent of its directors are independent under its 1996 guidelines and that CREF's definition of an independent - without ``significant'' ties to management or the company - was too restrictive.

In response to a shareholder question after the vote was announced, a top executive said Disney will listen to shareholder concerns on the issue but gave no indication it will change policy. ``Perceptions are important,'' said board member Sanford Litvack, senior executive vice president.

CREF has pointed out that Disney's directors include Eisner's attorney Irwin Russell; architect Robert Stern, who designed Eisner's home; Reveta Bowers, principal of the elementary school Eisner's children attended; the Rev. Leo Donovan, head of Georgetown University, to which Eisner has donated funds; and Raymond Watson and E. Cardon Walker, former Disney chairmen.

``We believe that Disney should now consider very strongly the wisdom of moving toward an independent board and instituting other appropriate governance reforms,'' said Peter Clapman, chief investment counsel of CREF's parent, Teachers Insurance and Annuity Association of the College Retirement Equities Fund, the world's largest private retirement system.

CREF and other critics have argued that an independent board is crucial for keeping management under control. In Disney's case, they cite the lucrative stock-option packages given to Eisner and the fact that there is no obvious successor for the 55-year-old chairman.

Eisner's defenders have pointed out Disney's stock price is up nearly 50 percent since its last annual meeting. It fell $2.125 to $111.93 on Tuesday. Printz admitted a resolution like CREF's probably won't pass next year unless the shares and financial performance decline.

During the meeting, Eisner introduced the 15 other board members and specified how much Disney's share price has risen since they joined the board. Since Russell joined in 1987, Eisner said, the stock has gained 588 percent.

This year's annual meeting took two hours and was attended by about 1,500 people. Last's year's lasted six hours and was highlighted by shareholder anger over the $90 million severance package to former President Michael Ovitz.

What next for Disney?

Walt Disney Chairman Michael Eisner offered a bullish outlook Tuesday for shareholders at the entertainment giant's annual meeting. Highlights:

The company is stronger than at any point in its history. ''We are now uniquely poised to build on this bedrock of strength,`` he said.

Disney employs more than 2,300 ''technologists`` on a variety of projects including one to merge the capabilities of television with the computer and the Internet.

Disney will benefit from stability and prosperity taking root in Latin America and Eastern Europe.

Disney will benefit from its status as the world's No. 1 entertainment brand. ''When faced with a clutter of choices, consumers tend to gravitate toward brands they have come to count on,`` he said.

Disney's management will become more international. ''I suspect I will be the last Disney CEO to be fluent in only one language,`` Eisner said.

In addition to already announced plans for theme parks, restaurants and a cruise line, Disney has many other projects in development.

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2 Photos, Box

Photo: (1--Color) no caption (Mickey Mouse)

(2--Color) EISNER

Box: What next for Disney? (See Text)