A lawsuit filed by former Walt Disney Co. director Roy Disney and seeking to void the company’s last board election will go to trial Aug. 10, airing claims that investors were misled about the search for a successor to chief exec Michael Eisner.
Delaware Chief Chancery Court Judge William Chandler III, who set the trial date Tuesday, will preside without a jury. Roy Disney and another former director, Stanley Gold, say the board promised an open search when it already had decided to elevate company prexy Robert Iger. The search dissuaded the two men from running an alternate slate against the board, they said.
“This case is a ticking time bomb for the Disney Co.,” said Robert Zito, a New York-based lawyer who defends companies involved in securities litigation. “If the judge throws out the board because of disclosure problems with the CEO search, it will likely invalidate everything that board has done, including the elevation of Mr. Iger.”
Suit was filed after Disney refused to provide the former board members with information about the selection process.
Iger is scheduled to take over as Disney’s top executive in September.
In their suit, Roy Disney and Gold contend the company and its board promised a careful and thorough search for Eisner’s successor as chief executive officer while secretly rigging the process in favor of Iger.
The board’s assurances about a full and fair search for a CEO induced shareholders to vote for the incumbent board at the annual meeting in February and “tricked” Roy Disney and Gold into backing away from offering an opposing slate of candidates, their lawyers argued in a June 1 hearing.
The incumbent board sought to discourage outside candidates from interviewing for Eisner’s post by requiring that he sit in on interviews, Roy Disney and Gold claimed in the suit.
Trial will last at least five days.