Roy Disney Resigns? (1 Viewer)

[Peter Kline]

New York Times
November 30, 2003

Roy Disney Resigns and Urges C.E.O. Eisner to Follow Suit
By CARLA BARANAUCKAS

The vice chairman of the Walt Disney Company, Roy E. Disney, resigned from the board of directors today, citing his ``serious differences of opinion'' with the chairman, Michael D. Eisner, ``about the direction and style of management in the company.''

Mr. Disney, the nephew of Walt Disney, also called for Mr. Eisner's resignation. In addition, Mr. Disney stepped down from his position as chairman of the feature animation division.

The resignation lays bare a sharp conflict in an entertainment and media company that has called its theme parks ``the happiest place on earth.''

``You well know that you and I have had serious differences of opinion about the direction and style of management in the company in recent years,'' Mr. Disney wrote to Mr. Eisner. ``For whatever reason, you have driven a wedge between me and those I work with even to the extent of requiring some of my associates to report my conversations and activities to you. I find this intolerable.''

Mr. Disney noted that the nominating committee had excluded him from the slate up for election to the board of the publicly held company, ``effectively muzzling my voice on the board.''

Just last year in a boardroom power play, Mr. Eisner prevailed over his chief critic and fellow board member, Stanley P. Gold, investment adviser to the family of Roy E. Disney, Walt Disney's nephew.

After that episode, the board was reconfigured, in a move that was said to reduce the influence of Mr. Eisner's critics.

Mr. Disney acknowledged that he fell into the category of critic.

``Michael, I believe your conduct has resulted from my clear and unambiguous statements to you and the board of directors that after 19 years at the helm you are no longer the best person to run the Walt Disney Company,'' Mr. Disney wrote, adding that in the last 10 years the company ``has lost its focus, its creative energy, and its heritage.''

 

[Dennis Nicholls]

Here's another version of the story:

http://story.news.yahoo.com/news?tmp...sney_report_dc

Roy is over the mandatory retirement age of 72 but that's been waived in the past.

I wonder what that will do to Disney releases?

 

[Peter Kline]

It means nothing. Roy Disney was not involved in the creative development of animated films.

 

[Chris]

No, but Roy was right on the need for Eisner to go.

 

[Quentin]

Soooo....I'm guessing they're going to lose Pixar.

 

[Gui A]

Found on the UltimateDisney.com/Forum boards, this is Roy E Disney's letter of resignation. WallStreetJournal.com subscribers have access to the full PDF.






November 30, 2003

Mr. Michael D. Eisner, Chairman
The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521

Dear Michael,

It is with deep sadness and regret that i send you this letter of resignation from the Walt Disney Company, both as Chairman of the Feature Animation Division and as Vice Chairman of the Board of Directors.

You well know that you and I have had serious differences of opinion about the direction and style of management in the company in recent years. For whatever reason, you have driven a wedge between me and those I work with even to the extent of requiring some of my associates to report my conversations and activities to you. I find this intolerable.

Finally, you discussed with the Nominating Committee of the Board of Directors its decision to leave my name off the slate of directors to be elected in the coming year, effectively muzzling my voice on the Board – much as you did with Andrea Van de Kamp last year.

Michael, I believe your conduct has resulted from my clear and unambiguous statements to you and the Board of Directors that after 19 years at the helm you are no longer the best person to run the Walt Disney Company. You had a very successful first 10-plus years at the company in partnership with Frank Wells, for which I salute you. But since Frank’s untimely death in 1994, the company has lost its focus, its creative energy, and its heritage.

As I have said, and as Stanley Gold has documented in letters to you and other members of the Board, this Company under your leadership has failed during the last seven years in many ways:

1. The failure to bring back ABC Prime Time from the ratings abyss it has been in for years and your inability to program successfully the ABC Family Channel. Both of these failures have had, and I believe will continue to have, significant adverse impact on shareholder value.

2. Your consistent micro-management of everyone around you with the resulting loss of morale throughout this company.

3. The timidity of your investments in our theme park business. At Disney’s California Adventure, Paris, and now Hong Kong, you have tried to build parks on the cheap and they show it and the attendance figures reflect it.

4. The perception by our stakeholders –consumers, investors, employees, distributors and suppliers – that the Company is rapacious, soul-less, and always looking for the “quick buck” rather than long-term value which is leading to a loss of public trust.

5. The creative brain drain of the last several years, which is real and continuing, and damages our Company with the loss of every talented employee.

6. Your failure to establish and build constructive relationships with creative partners, especially Pixar, Miramax, and the cable companied distributing our products.

7. Your consistent refusal to establish a clear succession plan.

In conclusion, Michael, it is my sincere belief that it is you who should be leaving and not me. According ly, I once again call for your resignation or retirement. The Walt Disney Company deserves fresh, energetic leadership at this challenging time in its history just as it did in 1984 when I headed a restructuring which resulted in your recruitment to the Company.

I have and will always have an enormous allegiance and respect for this Company, founded by my uncle, Walt, and father, Roy, and to our faithful employees and loyal stockholders. I don’t know if you and other directors can comprehend how painful it is for me and the extended Disney family to arrive at this decision.

In accordance with Item 6 of Form 8-K and Item 7 of Schedule 14A, I request that you disclose this letter and that you file a copy of this letter as an exhibit to a Company Form 8-K.

With sincere regrets,
Roy E. Disney

Cc: Board of Directors

 

[MatthewA]

1984 all over again. We knew this was going to happen.

He resigned from the company before in March 1977 over similar reasons, some identical to the ones here. (Side note: I'd watch Herbie Goes to Mediate the Hostage Crisis over Lizzie McGuire any day.)

If I recall correctly, under SEC rules he must resign his post before he wages war on the board.

Let's look at a few parallels:

1970s: departure of Sherman Brothers
1990s/2000s: departure of Alan Menken

1970s: declining ratings of anthology series; attempts to arrest this decline fall flat
1990s: declining ratings of ABC network; attempts to arrest this decline fall flat

1970s: Most movies doing poorly with critics and audiences
1990s: Most movies doing poorly with critics and audiences, but some exceptions

I know there are more but they elude me at the present.

Well, Roy, I wish you the best of luck trying to save this company again. Mickey Mouse and his friends might not have been part of my 1980s childhood if it weren't for your intervention the last time.

 

[Adam Lenhardt]

It's about damn time someone with some passion for what Disney should be stood up and took a stand. I applaud Roy Disney.

 

[steve jaros]

I have no idea whether Eisner or RD should be the one to go, but what's wrong with the Disney company? Their movies, video sales, etc. are doing extremely well.

 

[Edwin Pereyra]

Disney was a very good company and an investment from the early to mid-1990's. But the late 1990's through early 2003 has not been very kind to its stockholders, with its loss of focus, eroding shareholder value, declining attendance at its theme parks and lack of fresh and creative content in its animated studios division.

As a stockholder, I was very vocal in the poor quality of films Disney has released in recent years (i.e. Country Bears, Return To Neverland, Santa Clause 2, etc.). It was finally time to unload my equity interest after its recent runup early this year and look for other emerging companies (hint...hint... Marvel ).

As I've said all along, when a CEO of a Company is more concerned about putting himself on TV every Sunday night in The Wonderful World of Disney introducing films - a process more suitable for the actual filmmakers with direct hands on contribution to a film's creative content, one has to wonder if that CEO's time could be better served in more productive ways, especially during the time its Company is not doing all that well.

~Edwin

 

[Chris]

Ok, I just want to go through this for Steve

7. Your consistent refusal to establish a clear succession plan.

This one has a lot of shareholders unhappy as well. Even if Eisner retires at some point down the way, no one knows who is next in command, or who will get the reigns next. This creates some concern that should anything undo happen to him - and it could, you never know when the grim reaper comes calling - then there is no clear basis for leadership at Disney. This was originally raised by members of the board in 1999.

Roy has a lot of valid points, and in the most part, he's right. Disney went through a great revival in the late eighties/early nineties. But they have the environment back that drove off so much talent in the late seventies.

Disney is a multi-billion dollar company. And as a whole right now, many of it's properties aren't doing nearly as well as they should be. That's just a fact. It's an underperforming company that has not enticed a huge amount of investment dollars.

I don't think Eisner will go; but he should have went in 1998. But that's another story.

 

[Bryan Tuck]

It means nothing. Roy Disney was not involved in the creative development of animated films.

Actually, he was in charge of the feature animation department. I don't know how much involvement he had in actually developing the films, but he did have a say in it.

 

[Edwin Pereyra]

Chris has gone through the issues really well. In addition…

4. The perception by our stakeholders –consumers, investors, employees, distributors and suppliers – that the Company is rapacious, soul-less, and always looking for the “quick buck” rather than long-term value which is leading to a loss of public trust.

I was in Orlando for a seminar a couple of years back and we have someone from Disney Interactive as a guest speaker. His first few words were somewhere along the lines of, “Disney is here to make money and we’re not ashamed to admit that.” Those words are forever etched in my memory. Every time I watch a Disney film or buy one of their computer games as gifts, I always evaluate which came first – the drive for a quality product or the drive to make a quick buck?

~Edwin

 

[todd s]

On a side note about the parks. I was in Disneyland last month. And it the one day. 2 rides broke down and I noticed that the boats on It's A Small World were worn and needed rehab. I don't know if they are not maintaining things like they used to. Yes, I know the rides are old and they are constantly in use. But, I remember years ago. If something started to get worn. It was pulled and refitted.

 

[TheLongshot]

Anyone who has been through California Adventure has to wonder about the creative thinking that went into building the park because it seems and appears very little. The two shows I have seen in the Hyperion theater were a nice diversion. “Soaring Over California” was also nice but other than that, the park is not a must-see.

Not to mention that Disneyland's primary customer base is local. Why would they want to go to a theme park about their own state? Also, from what I've read, it also isn't very "Disney".

As someone else has mentioned, the quality of their parks seems to have dropped. I know the 20000 leagues under the sea ride hasn't run in years, and the Tiki room is just rotting away. It has also affected customer service, which was one of the most important things about Disneyland that made it special....

Jason

 

[Mark Zimmer]

When I'd heard some months ago that Disney had dismantled its traditional animation department, it sounded to me as if it was primarily aimed at forcing Roy out. That's too bad. He was behind a lot of good releases on DVD (I think the Treasures series can be attributed to him, and the fact that they're almost all uncut) and I think without him we're not likely to get the same quality of DVD releases, especially of historical pieces. I think with his leaving we can say goodbye to our last hope of seeing Song of the South again too.:frowning:

 

[TonyD]

.

 

[Scott L]

When's the last time a movie like Lion King, Aladdin, or the Beauty & the Beast was made? When's the last time a ride like Space Mountain, Big Thunder RR, or Splash Mountain was made? All pre-mid 90's.

I'm glad I'm not the only one who doesn't like the direction Disney's going in. Every year the company seems to lose more "soul." It seems they don't do anything for the people anymore, just their wallets.

 

[Chris]

A second board member quits, and writes a hot letter:

PRN Story

BURBANK, Calif., Dec. 1 /PRNewswire/ -- Stanley P. Gold today sent the
following letter to the Board of Directors of the Walt Disney Company:

December 1, 2003

To the Board of Directors of the Walt Disney Company:

It is with regret that I resign effective immediately from the Board of
Directors of the Walt Disney Company and second Roy Disney's call for the
removal of Michael Eisner as Chairman and C.E.O. I am proud of my more than
15 years of service and my role in reshaping the Company in 1984 by bringing
Frank Wells and Michael Eisner to the Company. I do, however, lament that my
efforts over the past three years to implement needed changes has only
succeeded in creating an insular Board of Directors serving as a bulwark to
shield management from criticism and accountability. At this time, I believe
there is little that I can achieve by working from within to refocus the
Company. I hope that my resignation will serve as a catalyst for change at
Disney.
The most recent evidence of the drive for insularity is reflected in the
Governance Committee's determination that Roy Disney should no longer serve on
the Board, ostensibly because Roy had surpassed the expected retirement age
established by the Board's Corporate Governance Guidelines. In fact, these
very rules regarding age, by their terms, only apply to non-management
directors, not to Roy, who, as the Committee knows, has been deemed a
management director. The Committee's decision and George Mitchell's defense
of it yesterday are clearly disingenuous. The real reason for the Committee's
action is that Roy has become more pointed and vocal in his criticism of
Michael Eisner and this Board. This is yet another attempt by this Board to
squelch dissent by hiding behind the veil of "good governance." What a
curious result.
Roy has devoted a lifetime to Disney as both an employee and Director. He
has served with renewed vigor during these times of malaise, disappointment
and instability at the Company, trying to maintain the morale of employees,
focusing on the magic that makes Disney special and attacking bonuses to the
CEO and increased compensation for Board members while the Company falters and
shareholder value erodes. He and his family have a very large financial stake
in the Company. Unlike Messrs. Watson and Murphy who have asked to be
replaced, Roy has sought even more involvement only to be told that his input
in animation will continue to be minimized and that his role as a Director is
no longer welcome. This Board has become an enabler to entrenched management
and, in so doing, is not effectively discharging its duties to the
shareholders. This conduct has resulted in yet another valuable human asset
of the Company slipping away. Within the last year this Board will have
managed to cull from its ranks Andrea Van de Kamp and now Roy, two of the
staunchest critics of Michael Eisner and the Company's poor performance. I
cannot sit idly by as this Board continues to ignore and disenfranchise those
who raise questions about the performance of management.
As this Board knows, during my tenure I have tried to be an active,
engaged Director. I believe a board should not merely rubber stamp decisions
of senior management. I decided in August of 2002 that it was not enough just
to express my views in the limited time set aside for our infrequent Board
meetings. I therefore began a series of written communications to the Board
regarding the Company, its management and the Board. I wrote to express my
disagreement and growing concern with management, its policies and the
effectiveness of the Board. I focused on the failed initiatives of the
Company over the past five or six years and admonished the Board for not
actively engaging in serious discussions regarding the Company's flawed plans
and management's unmet projections and unfulfilled promises. In particular, I
have urged the Board to concentrate on the Company's "poor performance, lack
of credibility and accountability and poor capital allocation." In an effort
to get Directors to seriously assess management's 5-year strategic plan (a
plan that is only discussed with this Board, but not submitted for Board
approval), I wrote to the Board to detail the Company's unsatisfactory
financial performance for the past several years and to suggest a process, a
so-called Diagnostic Review, designed to give the non-management directors the
tools necessary to evaluate performance and establish a comprehensive
framework and baseline from which the Board could be active partners in
developing plans to maximize the value of Disney's existing assets and
businesses. That approach was opposed by management and then, not
surprisingly, rejected by the Board. The Board and its Chairman even
criticized me for putting on paper these serious questions about fundamental
matters.
I believe the Board's adoption of its Corporate Governance Guidelines was
yet another example of this Board's commitment to image over substance. Among
other things, those Guidelines were carefully crafted to stifle dissent while
allowing those supportive of senior management to continue business as usual.
This was apparent when the Board applied its Guidelines to conclude that I was
not "independent" despite the fact that I frequently challenged management at
Board meetings and criticized both the Board's and the Company's performance.
That decision was initially based on my daughter's employment in a non-
executive position at Disney and, then, after that reason became insufficient
under the new NYSE Governance Guidelines, because of my association with Roy.
This resulted in my further isolation as I was no longer permitted to serve on
the Governance and Nominating Committee or the Compensation Committee. On the
other hand, John Bryson was deemed "independent" and appointed Chairman of the
Nominating and Governance Committee despite the fact that his wife is an
executive officer at Lifetime Entertainment Television, a 50% owned subsidiary
of Disney, where she earned in excess of $1 million in total compensation in
fiscal 2001. In addition, Senator Mitchell was appointed Presiding Director,
despite having been recently employed as a Company consultant and
notwithstanding that the law firm of which he was chairman received in excess
of $1 million for legal services on behalf of the Company in fiscal 2001.
At the time the Company's new Corporate Governance Guidelines were being
considered, I also urged the Board to separate the positions of Chairman of
the Board and CEO. This separation would empower the Board and help establish
its independence and oversight role. Not only did the Board reject that
initiative, the Board failed to give the newly established Presiding Director
any real substantive powers.
Continuing through March of this year I wrote to express my concerns
regarding the financial performance of the Company and the repeated failures
of management to achieve its forecasts. I urged this Board to feel a sense of
urgency in dealing with the issues of leadership, performance, operations and
accountability. Those efforts failed. Instead, Mr. Eisner was awarded a
bonus of $5 million in Disney shares by the Compensation Committee despite
objections by Roy and me. I believe that bonuses for senior management must
be tied to performance; by that measure, no bonus was warranted.
In a similar vein, I recently wrote to express my objection to the
Compensation and Governance Committee's joint recommendation that fees paid to
Disney Directors be increased dramatically, that stock grants to Directors be
substituted for options (and thereby render meaningless the requirement that
Directors own $100,000 in Disney shares) and that greater compensation be paid
to the Presiding Director. Raises for the Disney Directors at this time are
inappropriate based on my assessment of the Company's performance. I objected
to the increase for the Presiding Director on the grounds that it did not
reflect a reasonable payment for the only slightly increased duties. Finally,
I could not make sense of a share ownership requirement for Directors that
would be satisfied by a direct issuance from the Company at the same time
Directors' cash compensation was being increased.
It is clear to me that this Board is unwilling to tackle the difficult
issues I believe this Company continues to face -- management failures and
accountability for those failures, operational deficiencies, imprudent capital
allocations, the cannibalization of certain Company icons for short-term gain,
the enormous loss of creative talent over the last years, the absence of
succession planning and the lack of strategic focus. Instead, the Board seems
determined to devote its time and energies to adopting policies that focus not
on substance, but on process and, in reality, only serve to muzzle and isolate
those Directors who recognize that their role is to be active participants in
shaping the Company and planning for executive succession. Further, this
Board isolates those Directors who believe that Michael Eisner (when measured
by the dismal results over the last 7 years) is not up to the challenge.
Perhaps acting independently, from outside the Boardroom, not hamstrung by a
recently enacted Board policy barring Board members from communicating with
shareholders and the media, I can have greater success in shaping the
policies, practices and operations of Disney than I had as a member of the
Board.
In accordance with Item 6 of Form 8-K and Item 7 of Schedule 14A, I request that you disclose this letter and that you file a copy of this letter as an exhibit to a Company Form 8-K.

Very truly yours,
Stanley P. Gold

 

[Edwin Pereyra]

It will be very interesting how this all turns out in the end. Stanley Gold's departure now leaves a very big void as far as directors who have always put shareholder value and interest first and foremost.

Eisner is still Disney's #1 individual stockholder.

Disney has not been the same since Frank Wells' untimely death in 1994.

~Edwin