News Brief: Dissident Disney Shareholders Speak Out

Published February 8, 2005

By C. W. Oberleitner

Earlier today, Roy Disney and Stanley Gold issued a statement announcing they would withhold their vote for all directors at the 2005 Walt Disney Company annual meeting. They went on to say that they have not conducted a campaign to ask other shareholders to do the same.

Last year at this time, former Walt Disney Company board members Roy E. Disney and Stanley P. Gold were leading the charge to persuade Disney Company shareholders to withhold votes for CEO Michael Eisner and three other members of the Disney board at the company's 2004 annual shareholders' meeting. Their efforts resulted in a 45% NO confidence vote for Eisner and his relinquishing the title of chairman.

Earlier today, Disney and Gold announced that in an effort to step up pressure on the Disney Company board's search for a replacement for Eisner, the pair would withhold their votes for the entire board. They said they had not asked other shareholders to join them in withholding votes.

At the time of last year's shareholder revolt, the Disney Company, and Eisner in particular, were under heavy assault for anemic financial returns, the failure to turn around the flagging ABC television network, and the inability to renew their highly profitable relationship with Pixar Animation. At the same time, the company faced the threat of a hostile takeover by cable TV giant Comcast.

In the year since, the Disney Company has seen ABC's fortunes improve based mostly on the success of two new hit series, Lost and Desperate Housewives. Just last week, the company reported higher than expected earnings for the first quarter.

In today's announcement, Roy Disney and Stanley Gold indicated that they were pleased with some of the actions taken by the board this year (a copy of their full statement follows this report). They went on to say, however, that they want to make sure the board completes the selection process for a new CEO by June, as previously stated by the board, and to ensure that Eisner steps down as CEO.

Of particular concern to Messer's Disney and Gold was "the uncertainty regarding when Mr. Eisner will leave the Company."

While they did not mention Disney President Bob Iger by name, the former directors also voiced their concerns over reports that potential candidates were losing interest in the position because of the board's delays in setting up interviews. Delays in interviewing prospective CEO candidates have given rise to widespread industry speculation that the board has already decided on Iger, the sole internal candidate for the job.

In earlier statements made at last week's Disney investor conference, Disney Chairman George Mitchell rejected the idea that the board had already decided to promote Iger and that the search for Eisner's replacement was a "done deal." In a public statement Mitchell said,

We approach this decision in good faith with open minds. There has been no prior determination. There are no preconditions.

Text of Roy E. Disney and Stanley P. Gold's Statement

Roy E. Disney and Stanley P. Gold today issued the following statement on their vote at the 2005 Disney Company Annual Meeting:

Our voting decision at the 2005 Disney Annual Meeting rests on one question - Has the Disney Board adequately addressed the issues that resulted in the unprecedented vote of "No Confidence" at last year's annual meeting?

The Board has adopted a number of policies since March, 2004. The litmus test, however, as to whether this Board has truly reformed itself is how it conducts and implements the search for Mr. Eisner's successor. We are waiting to see whether this Board has the independence and dedication to its stockholders to conduct an open and honest search for a new leader with the vision and creativity to meet the challenges ahead - a person who will become only the sixth leader of Disney, a true icon of American business and culture. At this point in time, the Board's credibility is in question due to reports that they have yet to interview a single outside candidate. Potential candidates, meanwhile, are indicating a lack of interest in the position because of delays in the search process and the uncertainty regarding when Mr. Eisner will leave the Company.

The Board has set a deadline of June 2005 to select a successor. Until we see that this Board has faithfully discharged its duties in this most critical of Board functions, and that Mr. Eisner steps down as CEO and as a member of the Board upon the culmination of the process in June, we are WITHHOLDING our vote at the 2005 Disney Annual Meeting for all members of the Disney Board. We have not conducted a campaign to ask other shareholders to do the same.

Lest there be any confusion, by withholding our vote, we are doing precisely that, no more and no less. We are withholding our vote because we are withholding final judgment. In recent months, the Board has been saying the right words. We now await its actions

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Roy E. Disney addressing SaveDisney.com rally prior to 2004's Disney Company annual shareholder's meeting.