Disney Calls a Truce with Ex-Directors

Disneyland has two nicknames: the Magic Kingdom, and the Happiest Place on Earth. Its boardroom the last several months has lacked magic, and it certainly hasn’t been happy. CEO Michael Eisner, ex-Director Roy Disney and ex-Director Stanley Gold fought like wolverines in a gunny sack over the direction the firm was taking. Mr. Eisner is now gone, and last week, Messrs. Disney and Gold announced they were done fussing – for now.

The last issue that brought about the latest round of head-butting was the successor to Mr. Eisner and the manner in which he was selected. Robert Iger is due to take over the House of Mouse in September, but the ex-directors were upset that a wider candidates search, which they were promised, never occurred. A lawsuit seeking to void the election of the new directors and force new elections, as well as disclose all details about the new CEO search, was due to hit the courts in August.

It appears that the ex-directors came to the conclusion that their lawsuit was not going to fix things even if they won their case. Indeed, there is nothing worse for a company that the kind of legal fight that calls into question just who is on the board. The decision to skip the Pyrrhic victory was a sound one. The two have agreed to drop their lawsuit and not to run their own slate of directors or offer shareholder resolutions for the next five years.

In exchange, Mr. Disney gets an appointment as director emeritus and consultant. This is probably a better deal than they would have received from a court because litigation is often an either-or proposition. This deal offers both camps a bit of what they wanted. Mr. Iger gets to run the company for five years without the dissenters getting in his way, and Mr. Disney gets to watch his investment.

Mr. Iger takes over at a time when the company is doing better. After a weak patch from 1996 to 2003 or so, the company has posted double-digit growth, which many analysts expect to continue through 2007 at least. He is working on reviving talks with Steve Jobs and Pixar, talks that fell apart because, essentially, Mr. Jobs and Mr. Eisner don’t like each other. But none of this would have mattered if the Delaware court was in session. Score one for common sense.



© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
Produced using Fedora Linux.


Home