Eisner Knocks Failed Attempt to Oust Him
What, me worry?
That was the sentiment conveyed Thursday by Michael Eisner, one day after a shareholder revolt led the Walt Disney Co. board of directors to strip him of his title as chairman but allowed him to continue as chief executive.
Sounding confident and unapologetic during an interview with The Times, Eisner downplayed the growing demand for his resignation from the company he has led for nearly 20 years. Hewing to what has become a carefully crafted message, he suggested that shareholder backlash had little to do with the campaign against him and his management style but was aimed instead at corporate governance concerns.
Still, the interview did contain some new wrinkles. In an appearance just hours after Wednesday’s vote, Eisner told Ted Koppel on ABC’s “Nightline” that his intention was “definitely to serve ... out to its completion” his contract, which expires in 2006. On Thursday, he struck a somewhat different chord, saying that he would continue to serve at the pleasure of the board.
What follows are select portions of the hourlong interview:
Question: Were you surprised by the level of discontent shown by Disney shareholders?
Answer: In the last year, votes about separating chairman and CEO have been in the 35-to-40% range. This is a way for shareholders to express their concerns about corporate governance. In addition, this is, of course muddied by a dissident campaign. Disney is used as a vehicle to get a message out. That said, we recognize that it is substantial and can’t be ignored.
Q: How difficult was it for you to give up the title of chairman to the board’s presiding director, former U.S. Sen. George Mitchell?
A: Well, it was not difficult at all, particularly in that George Mitchell, who is so highly respected, such a man of integrity, was going to be taking that position. We have been discussing corporate governance for years, and one of the last issues has been the separation of chairman and CEO.... A lot of the vote [Wednesday] centered on that issue.
Q: So you did not resist the move?
A: I totally embraced it. I’m excited about it. To have George Mitchell take some of the responsibility of board leadership and allow me and [Disney President] Bob Iger and the management of the company to continue accelerating the growth that we’re experiencing was not only a relief, but an exciting prospect.
Q: Was there debate about Mitchell’s appointment, given that 24% of the shares cast were withheld from him and the fact that he is an ally of yours with a past business relationship with the company?
A: I don’t think it’s appropriate for me to discuss what went on inside a boardroom, but I would say from the very first moment there was uniform agreement that George was the natural choice. George Mitchell is the last person in the world to be compromised by anything.
Q: In giving up your chairman’s role, what duties are you handing off to Mitchell?
A: He will certainly take a lot of the responsibilities that I heretofore have been responsible for -- the entire representation of the board and the board meetings and those type of things. In addition, I hope that he will be an effective sounding board to me and others. It’s almost like I’m getting a partner who already knows the business.
Q: Critics say there is a disconnect between how you are characterizing the vote of shareholders and what many investors are saying.
A: It seems clear to us that there are multiple things this vote said. Possibly the predominant thing ... was about the separation of duties of chairman and CEO. Clearly our shareholders who understand the company are pleased with the momentum and progress of the company.
Q: But many of the investors who withheld their votes said they were not happy with your leadership.
A: I’m not going to address that issue, because I don’t think they said that. The shareholders I’ve read about cite not present performance but performance from three to five years ago. A lot of things that are being said are separate from reality.
Q: Do you have the credibility to lead the company given the huge vote of no-confidence?
A: The 60% stock increase [in the last year], the board’s confidence in the management and the [estimated] 30% gain in earnings this year stands above anything else. That’s what’s substantive.
Q: Former board members Roy Disney and Stanley Gold, who have lead the shareholder campaign against you, have vowed to continue doing whatever it takes to oust you. Are you concerned?
A: Frankly, I think they do a disservice to shareholders. They will go away because the performance will force them to go away. The shareholders will understand the facts from the fiction. You can’t walk through one of our parks or sit through one of our movies or go on a Disney cruise ship and buy their rhetoric.
Q: Did you underestimate their campaign?
A: The fact that Roy Disney looks like Walt Disney is a great benefit to their campaign. In the world in which I work, I cannot underestimate anything. I certainly didn’t think “Pirates of the Caribbean” was going to be the sizable blockbuster that it was.
Q: Do you intend to serve out your contract until it expires?
A: I serve at the will of the board as all CEOs do. I feel passionate about the company. My health is good. I enjoy what I’m doing and I intend to continue what I’m doing. That’s all I’m going to say.
(BEGIN TEXT OF INFOBOX) Disney directors
Here’s a look at the 11 directors of Walt Disney Co. who were re-elected to the company’s board on Wednesday, and the percentage of shares withheld from each. Year Percent elected of votes Name/title to board withheld
Michael Eisner, chairman, Walt Disney 1984 43% George J. Mitchell, former U.S. senator 1995 24 Judith L. Estrin, chief executive, Packet Design 1998 23 John E. Bryson, chairman, Edison Intl. 2000 22 Monica C. Lozano, publisher, La Opinion 2000 16 Robert W. Matschullat, private investor 2002 16 Leo J. O’Donovan, 1996 16 president emeritus, Georgetown University Robert Iger, president, Walt Disney 2000 15 Gary L. Wilson, chairman, Northwest Airlines 1985 15 John S. Chen, chairman, Sybase 2004 14 Aylwin B. Lewis, 2004 13 chief operating officer, Yum Brands
Source: Walt Disney Co.
