Darkbeer
09-30-2002, 08:56 AM
Disney's Boardroom Drama (http://www.fortune.com/indexw.jhtml?channel=artcol.jhtml&doc_id=209646) - Fortune, 9/29/02
QuikQuote: So it was not unexpected when the spotlight shifted to Michael Eisner, the chairman and CEO of Walt Disney. Disney, too, had lost money on the Internet, but that's the least of Eisner's problems. Disney shares are trading at levels not seen since 1994, its profits topped out five years ago, and its money-losing ABC-TV network has lost 32% of its viewers since 2000. Management blunders and executive defections have convinced Hollywood and Wall Street that Eisner's best days are behind him, and at least two Disney directors, Stanley Gold and Roy Disney, are losing patience with the CEO. Predicts one money manager: "The end is nigh."
Ah, but it's not-not by a long shot. That's why the drama unfolding this fall in the Disney boardroom is so compelling. One story line is familiar: Eisner is laboring to revive ABC, lift Disney's share price, and deliver a turnaround he has promised for years. The other is new: Eisner and the Disney board are grappling with fundamental questions of power and accountability. Pressures here are coming from inside the company and out. Eisner has promised better corporate governance. The dissident directors want more power. Institutional investors are agitating for change. And Ira Milstein, a corporate governance counsel hired by Eisner to guide the board, will be an advocate for reform. None of this means Eisner's job as CEO is at risk. But he could well be asked to give up his other position, as chairman of the Disney board. Then we will see how deep his commitment to good governance really goes.
QuikQuote: So it was not unexpected when the spotlight shifted to Michael Eisner, the chairman and CEO of Walt Disney. Disney, too, had lost money on the Internet, but that's the least of Eisner's problems. Disney shares are trading at levels not seen since 1994, its profits topped out five years ago, and its money-losing ABC-TV network has lost 32% of its viewers since 2000. Management blunders and executive defections have convinced Hollywood and Wall Street that Eisner's best days are behind him, and at least two Disney directors, Stanley Gold and Roy Disney, are losing patience with the CEO. Predicts one money manager: "The end is nigh."
Ah, but it's not-not by a long shot. That's why the drama unfolding this fall in the Disney boardroom is so compelling. One story line is familiar: Eisner is laboring to revive ABC, lift Disney's share price, and deliver a turnaround he has promised for years. The other is new: Eisner and the Disney board are grappling with fundamental questions of power and accountability. Pressures here are coming from inside the company and out. Eisner has promised better corporate governance. The dissident directors want more power. Institutional investors are agitating for change. And Ira Milstein, a corporate governance counsel hired by Eisner to guide the board, will be an advocate for reform. None of this means Eisner's job as CEO is at risk. But he could well be asked to give up his other position, as chairman of the Disney board. Then we will see how deep his commitment to good governance really goes.