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Roy Disney & Stanley Gold’s letter to the board

An Open Letter to the Non-Employee Members of the Board of Directors of The Walt Disney Company

Roy E. Disney
Stanley P. Gold

4444 Lakeside Drive
Burbank, CA 91505

September 13, 2004

Mr. John Bryson
Mr. John Chen
Ms. Judith Estrin
Mr. Alwyn Lewis
Ms. Monica Lozano
Mr. Robert Matschullat
Mr. George Mitchell
Father Leo O’Donovan
Mr. Gary Wilson

Ladies and Gentlemen:

For each of you the upcoming September 20 Board meeting will be a moment of truth – one in which you will have the opportunity to exercise your fiduciary duties and demonstrate your commitment to serving the best interests of The Walt Disney Company and its stockholders.

Michael Eisner’s announcement that he intends to remain CEO for the next two years forces you to make a critical decision. Will you choose to let the Company drift for two more years – allowing the pall Mr. Eisner has cast to continue to drive the most talented and creative people away from Disney, erode the morale of current employees, and prevent the Company from attracting the strong, dynamic, and creative leader it needs? Or will you reject Mr. Eisner’s brazen attempt to usurp your responsibilities as directors by stage-managing the appointment of his anointed successor and instead tangibly show your commitment to best corporate practices by immediately initiating an expeditious and broad search for a world-class CEO?

We understand and appreciate the difficult position in which Mr. Eisner has once again placed you. As those instrumental in bringing both Michael Eisner and Frank Wells to Disney in 1984, we know how close some of you are to him personally. But there is no acceptable solution that includes Mr. Eisner’s continued leadership at Disney for the next two years – let alone any longer than that. Regardless of whether he serves in a diminished capacity during the next two years as a “lame duck” or continues to manage the Company, the changes necessary to restore Disney’s luster will simply not be made.

As former Disney directors, major stockholders, and individuals with a longtime passion and commitment to the Company, we believe it is intolerable for Michael Eisner to continue to hold the Company hostage for two more years – and perhaps longer. As recently pointed out by the Los Angeles Times, “Management experts note that most retiring CEO’s take three to nine months to tie up loose ends and train a successor before hitting the exits. Longer transitions, they say, can be chaotic and disorienting.” In the case of Disney, where management turmoil has enveloped the Company for years, dragging out succession planning for another two years would be catastrophic. Disney cannot compete effectively in the constantly changing and evolving entertainment and media industry if it is frozen in place. Stockholders will continue to see the value of their investment languish, just as the price of Disney’s shares has over the past seven years.

While Mr. Eisner’s announcement at first blush looks like a major change, it is in truth mere window dressing. What he has really proposed is a scheme to arrogate the authority of the Board and maintain the status quo at the Company’s expense.

Press accounts suggest that Mr. Eisner intends to ask you to install him as chairman after he relinquishes the CEO title. In other words, his “succession plan” is for a company led by Michael Eisner and his obedient lieutenant, Bob Iger, to be handed over to . . . Michael Eisner and Bob Iger. Do you really think that this result will be tolerated by stockholders or will satisfy anyone that you have carried out your responsibilities? Any arrangement that permits Mr. Eisner to remain as Chairman after relinquishing his position as CEO is contrary to best governance practices. Disney stockholders deserve exemplary governance from their directors.

In effect, Mr. Eisner has challenged each of you to exercise the power delegated to you by stockholders. His preemptive announcement of his favored candidate to serve as CEO once again demonstrates his disregard for the proper responsibilities of the Board to make such vital decisions. In his view, the Board’s role is merely to rubber stamp his unilateral decisions, to provide cover for his real agenda.

Your course is clear. We ask you to immediately engage an independent executive recruiting firm to conduct a worldwide search for a strong visionary leader capable of guiding this Company as it faces the challenges ahead. Because we believe that no one with the skill, experience, dynamism and creativity needed to lead Disney will take the job if Mr. Eisner remains as CEO or chairman, we ask you to concurrently announce that Michael Eisner will retire as CEO and as a director at the conclusion of that search. If you make it clear that Mr. Eisner is leaving the Company and the Board, we have no doubt that a number of excellent candidates will beat a path to your door. In that case, choosing a successor could be accomplished prior to the 2005 Annual Meeting of Disney stockholders. This is more than five months away, surely enough time for a proactive Board to get the job done.

The actions this Board needs to take are straightforward. Once again, Mr. Eisner has placed his personal ambitions ahead of the interests of the Disney stockholders; in so doing he has hijacked your duties as directors. The only question is whether you have the courage to confront Mr. Eisner. More than six months have passed since the stockholders cast their resounding vote of no confidence in Mr. Eisner and this Board. During those six months, you, the non-employee directors, have done little or nothing to restore that confidence. For the good of the Company, it is time for this Board to demonstrate its independence. Bringing in a new CEO – and doing so quickly – is the first step in restoring the vibrancy of this Company. It will allow the Company to strengthen and broaden its management team and rebuild the morale of Cast Members. It will allow the Company to attract top talent and begin to repair the damaged relationships with Disney’s creative partners.

We intend to make it clear – to our fellow stockholders, to Disney Cast Members and to other Disney constituencies – that we will strongly support Directors who want to move Disney forward by requiring Mr. Eisner to leave as CEO and as a Director no later than the 2005 Annual Meeting and who are committed to the Board conducting an immediate search for a new CEO. By the same token, we will oppose with unrelenting vigor Directors who continue to support drift, delay, and decay. Should the Board not take the actions proposed above – immediately engaging an independent executive recruiting firm to conduct a worldwide search for a talented CEO and concurrently announcing that Michael Eisner will leave the Company at the conclusion of that search – we intend to take our case directly to our fellow stockholders and propose an alternate slate of directors committed to moving the Company forward aggressively.

You have the authority and the responsibility to manage Mr. Eisner’s succession. In so doing, we urge you to put first and foremost the interest of the Company stockholders, Cast Members, and the millions of people who love Disney. The spotlight is now on each of you. Disney stockholders and Cast Members deserve to know where you stand after this important Board meeting. We await your response.

Yours very truly,

Roy E. Disney, Stanley P. Gold