This article was updated at 1:35 p.m. on July 10, 2005.
A fairytale ending?
The Mouse and its incoming CEO Robert Iger have buried the hatchet with longtime nemeses Roy Disney and Stanley Gold in a surprise pact that effectively neutralizes two of the company’s most virulent critics, skirts another potentially embarrassing trial and promises at least five years of relative board harmony.
In return, Roy Disney, the nephew of founder Walt Disney who was kicked off the board in 2003, becomes director emeritus — a position that carries no vote — and a consultant, with an office on the lot. Disney has also agreed to adhere strictly to rotating chairmanships of board committees and other governance measures already in its corporate bylaws.
Move indicates a degree of street savvy and diplomacy on Iger’s part that eluded outgoing CEO Michael Eisner. Chief operating officer Iger, who is set to replace Eisner officially on Oct. 1, has also revived talks with Pixar. And he’s dismantled Disney’s internally unpopular strategic planning department.
But the apparent capitulation of Roy Disney and Gold, at least as divulged in a brief press release where most of the benefits listed accrue to Disney, may be Iger’s biggest coup yet.
Taken at face value, Roy Disney may have simply tired of the fight and sought a face-saving exit with the new chief executive. The parties said in the release they would have no further comment on the settlement. News sent Disney shares higher in after-hours trading.
In a joint statement Friday, the parties said Roy Disney and Gold have agreed not to run a rival slate of directors or submit any shareholder resolutions for the next five years. They also agreed to dismiss charges against the Mouse in a lawsuit headed to court next month.
The duo had accused the company and certain execs and directors of a shoddy CEO search and of misleading stockholders about the process at the 2005 annual meeting. They continued their threats to run an alternate slate of directors. A Delaware judge ruled last month the suit could go forward with a court date set Aug. 10.
Gold and Roy Disney, who have stalked Michael Eisner like bloodhounds since Roy was ejected from the board, “expressed confidence in Mr. Iger’s leadership.”
What’s more, “As Mr. Eisner retires after 21 years with the company, they acknowledged his contribution to the company over the years,” the statement said.
“In putting aside their differences, the company noted (Roy) Disney’s longtime devotion to the company and welcomed the re-establishment of a relationship with him and his family.”
Roy Disney and Gold had, ironically, been instrumental in getting Eisner the top job at Disney two decades ago but grew increasingly impatient in the mid-to-late 1990s that the company was losing its vision and direction.
The duo’s influence hit its apex at the 2004 shareholder meeting after a massive “Save Disney” campaign drew small shareholders from across the country to the Philadelphia confab. Their discontent was mirrored by big institutional investors dismayed by the company’s sluggish stock and then-trouble spots like ABC. The combined pressure forced Eisner from the chairman post, which was handed to director George Mitchell, the former U.S. senator from Maine.
Mitchell, who has been a target of Roy and Stanley’s ire as well, will retire next year.
Eisner announced plans to retire when his contract expired in 2006 but speeded up the departure date once Iger was named to succeed him last spring.
As ABC’s fortunes soared and Disney shares perked up, Roy Disney and Gold backed off. But their protest found a new voice in the company’s CEO search. The pair allege in the suit that the outcome was predetermined, that too few candidates were interviewed and that Eisner was too prominent in the process to make it truly objective.
It’s unclear what the trial would have turned up. Wall Street, newly happy with its investment, has tended to brush off the litigation as nothing more than an annoyance. But it’s one annoyance Disney clearly wanted to avoid. As the Ovitz trial amply showed, no company wants its personal laundry aired in public.
The question is, did the Mouse really have to do so little to get its way?