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Death March

First published March 04, 2004

By C. W. Oberleitner

Our own C. W. Oberleitner wasn't going to let a little thing like having his press credentials yanked at the last minute by Disney brass keep him out of yesterday's Disney Company shareholders' meeting. Here's Chuck's report from inside the hall.

Access Denied My A##

In his column today, Jim has probably already covered our experiences with the Walt Disney Company’s Corporate Communications department at yesterday’s Disney shareholder’s meeting. Over the years I’ve been asked to leave or been refused entry to a lot of places. I have, however, never been asked to wait while a senior executive was dragged out of a briefing center to revoke my credentials. I was impressed. As with every Disney cast member I’ve ever met, this gentleman was firm but polite. He was killing us with kindness as they say backstage at Disneyland. The problem was that unlike this gentleman, who flew to Philadelphia at the expense of Disney shareholders, I had traveled nearly 3,000 miles on my own dime to cover this event.

Jim and I split up. He returned to his laptop and Rolodex. I began frantically making calls to anyone and everyone I could think of who might have some leverage to get us in. In the end, as you probably know, Jim stayed outside and I was able to gain entry to the meeting.

At the suggestion of a public relations contact I began talking to anyone and everyone with a microphone. I told them how the company had decided JimHillMedia.com was—following Jim’s interview in Tuesday’s Wall Street Journal—considered too much of a SaveDisney.com advocate to be admitted, as members of the media, to the meeting. Despite the fact that the same company would be granting the founders of SaveDisney.com fifteen minutes to address the shareholders.

In less than five minutes Charles Fishman, Senior Editor of FASTCOMPANY, "a new business magazine for people hell-bent on making a meaningful difference with their lives," had overheard my story. Mr. Fishman had decided to attend the meeting using his proxy rather his press badge. As a proxy holder he was entitled to bring in one guest and he asked if I would like to attend as his guest. I was in.

Thank you Charles Fishman and FASTCOMPANY magazine.

No Surprises Here

The first 90 minutes of the meeting were the most informative and entertaining. Michael Eisner, speaking with a very hoarse voice, presided. After a few brief remarks in which he once again repeated the WDC’s now standard mantra of higher earnings and 30% growth for the coming year. His remarks received a vigorous round of applause from a group of people sitting in four or five rows of chairs directly in front of the stage. Their accolades echoed off the walls and danced about the ears of the otherwise still and silent audience.

Following Eisner presiding director, former U.S. Senator George Mitchell, gave a presentation about the company’s corporate governance history and polices. Following his remarks he presented, via slide presentation, the members of the board up for re-election. As he called out each board members name the audience responded with applause. Once again, when Eisner’s and WDC COO, Robert Iger’s names were called out only a small section of the audience located near the stage responded. Silence reigned down throughout the rest of the hall. It was a telling moment that set the tone for the rest of the day.

Senator Mitchell also introduced two retiring members of the board. Thomas Murphy, the former head of ABC/Cap Cities who arranged the sale of ABC to Disney and Ray Watson head of the Irvine Company a California based land development company. Following Senator Mitchell’s remarks Eisner opened the meeting to the business at hand, election of board members for a one year term and voting for three shareholder proposals.

Michael Eisner acknowledged that his re-election, as well as those of several other board members, was a matter of some contention with former members of the Disney board Roy E. Disney and Stanley P. Gold. He said the company, "in the interest of fairness," had decided to give the two men fifteen minutes to address shareholders.

As a spotlight came on illuminating a guest speaker’s podium and Roy and Stanley approached the hall erupted in applause, whistles, and cheers. It was clear that the great majority of people in the audience wanted to show their support for the two men as nearly two thirds of them rose to their feet and gave the former board members a rousing ovation.

Stanley Gold spoke first. His comments, for the most part, were a repetition of the ones he had made at the previous day’s SaveDisney.com rally. The only time he deviated from his previous remarks was during his conclusion. He closed by saying that both he and Roy expected the NO vote on Eisner to be 40% or greater. This bold prediction set off a wave of murmuring in the audience. Eisner, who was standing on the main stage above the speaker’s podium and Bob Iger and two Team Disney Burbank (TDB) executives seated at a table behind Eisner, never flinched or changed expression.

Floorshow

Following Roy and Stanley’s remarks it was time to open the microphones for shareholder questions. First up, with her nearly imponderable Dutch accent ricocheting throughout the hall, was professional corporate gadfly, Evelyn A. Davis. Ms. Davis makes a career out of holding CEO’s feet to the fire and she isn’t afraid of them in the least. Doing what no Internet correspondent has ever been able to do and damn few mainstream journalists have had the opportunity to do Evelyn Davis began reprimanding the CEO of the world’s second largest entertainment conglomerate like a Victorian era schoolmarm dressing down a naughty boy.

Under any other circumstances Ms. Davis’ questions and remarks might have benefited Disney shareholders rights. This day, however, all they accomplished was to provide what at first were some real laughs for an audience that was already growing weary of sitting. Eventually Ms. Davis made her way to the microphone a few times to many and the crowd began calling for her removal. Who knew then that hers were to be the most entertaining moments of the day.

Beat the Clock

Because of my lack of media credentials and to avoid arousing suspicion I could only casually engage crowd control cast members in conversation. For that reason I had to guestimate attendance at this year’s WDC shareholders’ meeting at round 3,300 people. Most of the audience was seated by nine thirty that morning. The meeting didn’t begin until a few minutes past ten and it was well past eleven by the time Evelyn had been shooed away and discussion was closed on the last of three shareholder proposals. Final voting began after that.

To fill the time between the close of voting and the announcement of the preliminary results Michael Eisner called upon the heads of the company’s various divisions to report to the assembled shareholders. This process began what became known as the death march.

Later that day my colleague here at JHM.com, Jeff Lange, would say, "That meeting made The Lord of the Rings look like a short subject."

One by one each division chief came to the podium and opened their remarks in Zenia Mucha’s patented middle school pep-club style, praising Michael Eisner’s leadership. To a person, each speaker lifelessly droned on for twenty minutes or more about the past, present and future performance of his or her division. None of them had anything to say that couldn’t be found in either the annual report or Disney’s own website.

Only Walt Disney Studios head honcho Dick Cook presented anything of interest. He came with an armload of trailers for upcoming movies. Theme Parks and Resorts President, Jay Rasulo, sounded more like a travel agent than an executive. When it came time to talk about the company’s big plans for Disneyland’s 50^th Anniversary he gave the subject less than thirty seconds. He got his best laugh when he told the audience that,

"Soarin Over California is an amazing simulation of hang gliding over The Garden State."

For the record, New Jersey, which is across the Delaware River from Philadelphia, is The Garden State. California is known as the Golden State.

After about an hour of this it soon became obvious what was going on. Disney was deliberately trying to run out the clock and hold off announcing preliminary vote totals until after the deadline for that evening's national newscasts. As the meeting relentlessly dragged on with presentation after presentation shareholder after shareholder gave up and walked out. By three thirty when Michael Eisner finally called an end to the Q & A session fewer than 30% of the original crowd remained in the hall.

It Only Takes A Moment

I’ve often been asked why I go out of my way to cover events like this. The answer is somewhat complex but the short version is that it’s a wonderful opportunity to watch history being made. One of the greatest rewards of this job is being able to see the moment when things as we know them change forever.

This particular moment came at approximately 3:43 PM, EST in Philadelphia Pennsylvania. Like so many other such moments it arrived not with a bang but a certain peaceful serenity.

As the preliminary vote totals were being read out the few hundred people left in the hall were all busily trying to calculate percentages of withhold votes by mentally dividing hundreds of millions by billions of votes. It was a painful process to watch.

Instead, I focused my attention on Michael Eisner, who from on stage was looking down on the accountant below. I could tell that he too was doing the math while listening to the totals. And then it happened.

Michael Eisner shrank. For the first time that day his spirit and personality were visibly diminished. Not dramatically. There was a reduction in the intensity of his gaze and slight sinking of his chest. It was like watching the wind slowly leave his sails.

Here are the preliminary vote totals:

In financial investment circles, a withhold of 20% or greater is consider to be a significantly poor showing and a sign that investors want to see change.

What Next?

Immediately following the conclusion of the WDC shareholders’ meeting the press moved across the street to the Loew’s hotel where SaveDisney.com held another press conference. To say that Stanley Gold seemed pleased would be like saying Orson Wells simply appreciated a good buffet. If Eisner was diminished Gold was elated.

While pleased with the outcome Stanley continued to stay on message. And that message was that the shareholders had sent a clear message, "Michael Eisner must go and soon."

Roy and Stanley continued to deny that they have opened talks with any potential candidates. They said they have no plans on meeting with the WDC board but would meet with them if asked.

Both Gold and Disney acknowledged the roll played by the Internet in bringing their message to thousands of individual Disney shareholders. In stark contrast to the Disney organization, which earlier in the day shunned Jim and I, Stanley Gold gave me the final question of the day.

I asked what message he and Roy had for Disney fans and shareholders who get of their news of the company, not from the financial press, but the Internet.

"I’d like to say something to those folks." Mr. Gold began. "These folks were our early supporters. This is a referendum on real (corporate) governance in America. You’ve got to put Disney into the context of what’s happening in America following the Enron… and other scandals.

The country has said we want real governance in our companies…

This board has as clear a message as any company has ever had.

The message is Eisner must go and now the owners have said the board must go too."

As Nightly News Anchor Brian Williams Once Said

With those remarks this week’s events in Philadelphia ended. Or, depending on your point of view they were just beginning. Shortly after saying goodbye to Jim, Nancy, and Jeff I returned to the lobby bar of the Loew’s hotel. NBC maintains a small broadcast booth there so the place is a magnet for thirsty reporters of all kinds. Sure enough within minutes of entering the bar I was up to my nose in potential news.

I heard that the Disney board was going to announce that they were reaching out to News Corp. COO and director Peter Chernin and Viacom President, COO and director Mel Karmazin. I tried the news out on a source I have among Disney’s many dissatisfied shareholder groups. He seemed disinterested. Not the reaction I expected, although like the rest of us he could have just been tired.

I returned to the bar and snooped around a bit more. Sure enough the true story was that CNBC was going on the air live in thirty minutes and would be reporting that "A dissident shareholders’ group had reached out to Chernin and Karmazin," to see if the pair would be interested in taking over the top spots in the Magic Kingdom.

Later that evening CNBC also reported that Karmazin had issued a statement saying he had no interest in going to the Mouse House.

Once again, as Brian Williams told Jay Leno, "It’s time to grab a theory and hold on."

This Just In

As this story is being put to bed the late evening news is reporting that late Wednesday afternoon the Disney board of directors met and replaced Michael Eisner as Chairman of the Disney board with presiding director George Mitchell. Eisner will remain CEO of the company. Former Senator Mitchell received a 24.1% withhold at Wednesday’s shareholders’ meeting.

This website and several LA news agencies reported earlier this week that Eisner, Mitchell and several other members of the board had met this past weekend and previously reached an agreement for Eisner to step down as Chairman if there was a substantial withhold vote.

In statements issued over the past two days Stanley Gold and Roy Disney have made it clear that such a maneuver by the Disney board would be "unacceptable."

Stay tuned.

C’ya real soon!

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The streets of Philadelphia prior to the Disney Company shareholders meeting. The company barred all cameras, cell phones, PDAs and calculators.