Edited by Douglas Harbrecht

Shareholders may be up in arms about his paycheck and the severance package he gave to Michael Ovitz, but the day before Michael Eisner was slated to meet shareholders, the Walt Disney Co. CEO was talking about spending money. On Monday, Feb. 24, Eisner and Pixar founder Steven Jobs announced a $15 million deal in which Disney bought a 2.5% stake in Pixar Animation Studios, the computer animation shop that made 1995's hit Toy Story. Disney also gets warrants to buy another 2.5% of Pixar if it chooses.

Disney will get Pixar's next five animated films and will have exclusive rights to Pixar films for the next 10 years. The two companies have been doing business for the last six years, and Pixar was already committed to delivering two more films under the earlier agreement. Unlike the previous arrangement, in which Disney financed the films and took roughly 90% of the profits, the two companies will co-finance films from now on and share the profits. Pixar will also share in all profits from merchandising, records, and any other ancillary rights that come out of its films.

Jobs says his company had been approached by several other studios following Toy Story's success, but Pixar decided to stay with Disney. "A lot of people called us, but if you're going to have a partner, why not have the best?" Jobs tells Business Week Online. He claims that "every major studio has tried to get into animation in the past 60 years, but only two have ever made a blockbuster that grossed over $100 million: Disney and Pixar."

Eisner deflected questions about compensation brouhahas that have pitted some large Disney institutional shareholders against the Disney CEO. Led by the California Public Employees' Retirement System (CalPERS), some investors are threatening to boycott the Feb. 25 annual meeting and may refuse to vote for five Disney board members up for reelection. At issue: the estimated $93 million severence package Ovitz collected after serving for 14 months and a new contract that gives Eisner an estimated $195 million in stock options even if he leaves the company early. Eisner declined to comment, but he did muse aloud at the press conference to Jobs that maybe "CalPERS wants a seat on your board."

As for talk that Jobs is maneuvering to gain control of ailing Apple Computer, which bought his NeXT Software Inc. in December for $430 million, Apple's co-founder maintains that he's not interested. "I hope this [deal with Disney] clarifies some of the fantasies out there. I spend almost all my time at Pixar."

By Ronald Grover in Burbank, Calif., with Peter Burrows in San Mateo, Calif.