The following is the text of Michael Eisner's letter to Disney's board of directors:

September 9, 2004

As we approach the end of the fiscal year and my 20th anniversary as CEO, I would like to share with you some personal observations about our Company. I have been honored and proud to be the Chief Executive Officer of this remarkable company for that length of time. Let me touch on what we have accomplished, what we have to do, and some of my personal plans.

Putting last things first, I plan to retire from my role as Chief Executive Officer of the Company upon the conclusion of the term of my employment agreement on September 30, 2006. Until then I shall continue to exert every effort to help the company achieve our goals, to assist the Board in selecting the new Chief Executive Officer, and to make the transition expeditious, efficient, and smooth and easy.

As to our current performance, we are and should be proud of how we have managed and strengthened the Company during difficult times. I won't repeat the detailed facts and figures which we have discussed or the comments made by me in the conference call to the financial community in August which I have already sent to you. I have been told by you, by friends, but mostly by outside observers, that it is quite extraordinary that we have been able to remain focused on our objectives and have managed to run the Company so well amidst the distractions that have taken huge chunks of time during the past several years.

Disney's management team has proved its devotion to the company and has taken advice once offered by Babe Ruth. In the midst of a World Series, when asked how he keeps his cool when the fans go crazy, hollering and hooting every time he comes to bat, he explained: "I keep my eye on the ball". Our executive team has not been diverted from the task of creating intellectual product, efficiently running the Company, and preparing for the future.

I know it has been a very challenging time for the Board members during this period, and I am most grateful for all of the time and effort, consideration and support, and concern for the Company that all of you have demonstrated.

Most of you were not part of the Company as we grew and prospered, both domestically and internationally since Frank Wells and I came aboard in September 1984. Statistics only tell part of the story, but let me throw out a few: Total number of employees - from 28,000 to 117,000; Revenues from $1.7 Billion to a projection of roughly $30 Billion for this fiscal year; Enterprise Value from $2.8 Billion to $57 Billion. This, of course, is an outgrowth of the seven new parks, 28,458 new hotel rooms, 70 new cable channels around the world, and 800 new movies we created.

Our major acquisition, CapCities/ABC, in January 1996 (whose value has gone from a net cost of $16 Billion to an estimated analyst value of $39.1 Billion-$53.3 Billion), was most important to the continued growth of our Company, in an era of consolidation of media, of production and distribution, and vast technological change.

Along the way, I have been well rewarded for my efforts and the Company's performance. I have reinvested a substantial portion of those proceeds into Disney stock (14 million shares). That and my strong feelings for the Company are the incentive to make the Company even more successful and to be sure this success continues beyond my tenure as CEO.

We are different from companies not in the entertainment field. We are a creative company, and as a result, we are so much more. We must consider, develop, discard and reconsider, literally masses of ideas each day, based on few inexact criteria, using experience, talent, judgment, instinct, and hope as our guides along with our education and experience and sense of fiscal responsibility. This is a complicated and risky process, unlike the manufacture and sale of a single or related line of product. We are judged by definitive standards. But it is the creative that pushes to new heights that which can be measured, that which has lasting value to our culture and company.

I believe we have learned who we are, and who we are not; what we do best, and what we don't. Of course, that does not mean we stagnate into a museum or play safe. It just means we play smart. There are so many opportunities available to utilize our core assets, our brands and capabilities around the world. We must be completely informed and involved in the future, in new technologies that can help us maintain our leadership in creating and distributing and protecting our content. We must be prudent entrepreneurs and pragmatic capitalists. We must not forget that we are always singing and dancing 'for our supper'.

We are determined to continue to improve our performance through our focused attention on our creative initiatives, from the Studio to the Media Networks, from our three-dimension worlds to our cyber future, from one end of the globe to the other. And I predict the combination of 'the definitive' and the creative at its core will result in a significant boost sooner rather than later. Having just returned from an Albert Einstein conference at the Aspen Institute, I am struck by his commitment to creativity. "Imagination is more important than knowledge."

I expect the next two years will be critical to the future of our Company and that we must take advantage of the positive projections we anticipate. The momentum has changed. But in a sense, it is harder to manage a Company in success than in failure. We now have to continue the teamwork and selflessness that marked the last couple of years. We have to maintain that spirit as the spotlight will find us more and more in the winners' circle.

It has been a fantastic Disney ride for the past twenty years. Ups and downs to be sure, but filled with great satisfaction in building this wonderful creator of classic American culture into one of the premiere entertainment oriented companies in the world. My affection for Disney will never retire. And, like our campaign, suggested by Jane in 1986 that seems to resonate for so many, I can only conclude by telling you what I am doing next. "I'm going to Disneyland!"

Sincerely,

Michael Eisner

Question: Should Save Disney (Roy Disney and Stanley Gold) and like-minded institutional investors and individual stockholders continue to pursue the alternative slate of officers for shareholders to vote on at the next Annual Stockholders' meeting in March 2005?

Roy Disney, Stanley Gold, and others wanted Michael Eisner "out" as CEO, but as soon as possible and not two years from now. Michael Eisner is retiring, but in two years not as soon as possible. Michael Eisner seems to be leaving, true, but on his terms and timetable, no one else's. Michael Eisner nominated Chief Operating Officer Robert Iger over last weekend to be CEO and his designated replacement. Named this person over a slow business news 3-day holiday weekend with a major hurricane threatening one of the Disney theme parks in the news. Save Disney-Roy-Gold in earlier reports had other names in mind who would make good CEOs. Iger has only been with Disney since 2000 or so. Is that enough time to understand Disney culture, be "Pixie Dust-ified" and "get it" about the pop cultural legacy of Disney that people are born and raised with? In the next two years as Michael Eisner works to groom Robert Iger for the CEO job, will that distract Eisner from addressing shareholder concerns that prompted the massive withhold vote at the Shareholders' Meeting March 3, 2004?

For someone born in Alabama, lived awhile in California, and now lives near New Orleans I sure ask a lot of questions!!!!! But inquiring, and educated, and Disney shareholder minds, want to know, I figure. And as they say, no such thing as a bad question....

Personally, I think Save Disney and the like-minded ought not let up one bit. Eisner and Iger, in the next two years of grooming and transition, can sign contracts, get Disney going in certain directions, continue to pursue current directions, that may mean such changes from what we as fans felt wasn't broken or needed fixing it will be very costly and difficult to divert from those plans and directions.

Am I wrong or misguided to think that? Point it out to me. Not to be argumentative, of course not, but I care, I'm a stockholder, and I think two years can be a long time to wait for "change".

Thanks in advance. Looking forward to an interesting discussion if anyone wants to pursue it.

continue to pursue the alternative slate of officers for shareholders to vote on at the next Annual Stockholders' meeting in March 2005?

Yes, the problem is deeper than Eisner. He has pretty much hand chosen every single board member. They will only do his bidding in choosing a successor.

According to CBS MarketWatch.com as of 12:05 pm EST 9/10/04:

Elsewhere on the Dow, shares of Walt Disney (DIS: news, chart, profile) climbed 1.4 percent on news its chief executive, Michael Eisner, plans to step down when his contract expires in September 2006.

Disney's management team has proved its devotion to the company and has taken advice once offered by Babe Ruth. In the midst of a World Series, when asked how he keeps his cool when the fans go crazy, hollering and hooting every time he comes to bat, he explained: "I keep my eye on the ball". Our executive team has not been diverted from the task of creating intellectual product, efficiently running the Company, and preparing for the future.

No, your executive team was actually put back ON TRACK of developing intellectual product, blah blah, according to Jim Hill. Shareholders complain about Disneyland needing paint? Now Disneyland has been getting painted since at least March.


Our major acquisition, CapCities/ABC, in January 1996 (whose value has gone from a net cost of $16 Billion to an estimated analyst value of $39.1 Billion-$53.3 Billion), was most important to the continued growth of our Company, in an era of consolidation of media, of production and distribution, and vast technological change.

Hmm, nothing about the bleeding of profits and how the other profitable areas suffer because of the dearth of quality (and inexpensive -- always seems to be one or the other) programming.
If it's so valuable and unprofitable, then sell it, ya idgit!!

According to CBS MarketWatch.com as of 12:05 pm EST 9/10/04:

Elsewhere on the Dow, shares of Walt Disney (DIS: news, chart, profile) climbed 1.4 percent on news its chief executive, Michael Eisner, plans to step down when his contract expires in September 2006.

Think how much higher it would go if he left earlier.

Included in the current stock price is the low probability of Pixar returning. That he is definitely retiring 2006 has just increased that probability, and thus the stock price.
Plus or minus $1.

http://www.nypost.com/business/28257.htm

ROY DISNEY STEPS UP EISNER FIGHT

September 10, 2004 --

Roy Disney, a former director of Walt Disney Co., said he will press ahead with his campaign to oust Chief Executive Officer Michael Eisner because he is doing "an awful job" running the world's second-largest media company.

"We will definitely continue in our battle," Disney said in a telephone interview from Sardinia, Italy, where he is competing in the Maxi Yacht Rolex Cup with his boat, Pyewacket. "We already have devised the next moves, which I can't disclose, but we do have specific plans on what to do next."

[....]

The dissidents are unlikely to convince investors and the board that top management at the company should be replaced, said Jack Liebau, president of Liebau Asset Management in Pasadena, Calif.

"Michael Eisner and Disney management are very resilient," said Liebau. "At the end of the day, I believe Eisner will continue to serve out his contract and that ultimately [Disney President] Bob Iger will succeed him."

[....]

"We believe he's doing an awful job," said Disney, vice chairman of Shamrock Holdings Inc., said of Eisner. "And we wouldn't be in this battle if we didn't think we can win it."

The dissidents have said they plan to nominate their own slate of directors for next year's annual meeting and have said their campaign will continue until Eisner steps down.

-Bloomberg

I expect this will effectively take the wind out of the sails of any further gains at the next shareholders meeting.

With an exit and succession planned, I expect most institutional shareholders will prefer to stay the course and have a stable transition than throw the whole company on its ear with uncertain results.

Unless Iger is completely unsatisfactory to Wall Street.

Rather, I expect it'll be an opportunity to put in place some procedural reforms to help make sure the Eisner problems don't arise again.

So ABC/Cap Cities is worth $39-53 billion, while the company's market share, as of right now, is $47.67 billion?

Somebody's telling a fable, and I don't think it's the Yahoo! ticker.
Time-Warner is itching for a network, but might not be able to swallow it (market cap 74.5 billion, cash = $6 billion).

No, your executive team was actually put back ON TRACK of developing intellectual product, blah blah, according to Jim Hill. Shareholders complain about Disneyland needing paint? Now Disneyland has been getting painted since at least March.Good points, sediment. But I see a schism rather than lackey executives obeying the CEO. Eisner just as easily could have ordered Cynthia Harriss or Paul Pressler to improve Disneyland's state. He didn't, it would seem. Apparently with meager budget from the past and now gone DL administration, the new Theme Parks President and new Disneyland President are doing what they can to make things "proper" because it's the right thing to do for public relations and lack of maintanance and upkeep of anything today means increased and worse repair costs tomorrow. Just my speculation, though.

Chief Operating Officer Robert Iger has only been at Disney a few years. It's Iger's job to turn ABC-TV around, and it's ABC that is the albatross around Disney's financial neck. The TV season has only just begun. Let things play out through the end of November ratings period and the results in, sometime in early December. Disney right now is trying to juggle things so that Fiscal 4th Quarter looks as good as it can be, given Hurricanes Charley and Frances (and Ivan??) effect on Florida tourism which closed the Disney parks for 3 days, and a disappointing showing at the summer box office. Did you know Disney Home Video is re-releasing "Pirates of the Caribbean" in a 3-disc gift set in time for Christmas, DVD #3 being a Bonus Disc of extra material (aka "The Lost Disc") to try to bring sales into Fiscal Quarter 1 2005 after October 1. ABC fates and fortunes in the new TV season will be known farther into, Fiscal Quarter 1 2005. "The Incredibles" opens in Fiscal Quarter 1 2005. Then we have January - March 2005 as Fiscal Quarter 2, and that is when the Disney Annual Shareholders' Meeting will fall, with the Disney Annual Report in February. I think Iger has his work cut out for him if he or Eisner or the Disney Board expect an approval of the shareholders of Iger as Disney's future CEO in two years.

Speculation posted at JHM..
http://www.jimhillmedia.com/mb/articles/showarticle.php?ID=1078

"WRONG! According to corporate insiders that I've spoken with, the terms of Eisner's employment agreement with the Mouse House call for Michael to continue on as a paid consultant for the Walt Disney Company for a period of no less than three years. So -- even after he steps down as CEO -- Eisner's still going to have a say in how the Disney corporation is run.
More importantly, I keep hearing that Michael is looking to pull a Card Walker. As in: Just as Disney's former Chairman & CEO did 'way back in May of 1983, Eisner wants to go from running the Walt Disney Company to taking a position on the corporation's Board of Directors. Which (obviously) would allow Eisner to continue to have a say in how the Mouse House is run."

he's like the Undead... they never go away....

You don't need "sources." It is in the proxy statement. Starting on page 16 of the 2004 Proxy Statement (http://corporate.disney.go.com/investors/proxy/proxy_2004.pdf). Quotes elements are relevant to him letting his contract lapse at its conclusion rather than early termination.


Michael D. Eisner. Mr. Eisner serves as Chief Executive Officer of the Company persuant to an employment agreement originally entered into on January 8, 1997, as amended and related on June 29, 2000. The agreement provides for Mr. Eisner's employment through September 30, 2006 (subject to ealier termination under certain circumstances as described below).

.... In the event of termination of employment as a result of death or disability or upon normal termination of the agreement in September 2006, Mr. Eisner will be eligible for a bonus for the fiscal year in which the termination occurs and will receive post-termination bonuses calculated in accordance with the foregoing for the 24 months following such fiscal year.*

...

The agreement also provides for Mr. Eisner to serve as a consultant to the Company after expiration of the agreement at a fee to be mutually agreed, which may be nominal, plus continuation of the benefits and/or perquisites provided him during his term as Chief Executive Officer, excluding any items that would conflict with laws, regulations and/or tax qualifications applicable to the Company's group health, pension and employee welfare plans, and other than salary, bonuses and stock options, except as otherwise provided in the agreement with respect to certain specified continuing obligations (principally post-termination bonuses, as described above). Any such consulting agreement would be terminable by the Company if Mr. Eisner were to accept employment with a third party, render any services to a competitor or become disabled.

Realisticly this is just a trinket to make sure Eisner continues to get certain benefits. Unless Iger is a complete stooge the first thing that will happen when he takes over is it'll suddenly be harder to find time on his schedule for chatting with an old comrade. He will need to quickly try to show himself to be an independent actor. If the board should pick someone else, this is even more true.




* The bonus terms are the higher of $6 million/year or the average of his last three bonuses. Look to see if he gets unusually high bonuses this year and next. This guarnatees that he will receive a minimum of $12 million in the two years following his retirement.

And it doesn't say he will resign from the board of directors so he may continue to wield some authority from that angle. Not a lot, but some.

Well, he would have to be elected (I think) to remain on the Board. He is a large stockholder (larger than Disney and Gold, I think, as they have been wisely selling their stock over the past many years), so he should have some say in what his investment is doing.
That said, I'd vote against him.

Realisticly this is just a trinket to make sure Eisner continues to get certain benefits.
"Oh we're so sorry, Mr. Eisner, but it looks like you've let your Blue Shield coverage lapse. You'll have to pay full price for that prescription."

We are different from companies not in the entertainment field. We are a creative company, and as a result, we are so much more. We must consider, develop, discard and reconsider, literally masses of ideas each day, based on few inexact criteria, using experience, talent, judgment, instinct, and hope as our guides along with our education and experience and sense of fiscal responsibility. This is a complicated and risky process, unlike the manufacture and sale of a single or related line of product. We are judged by definitive standards. But it is the creative that pushes to new heights that which can be measured, that which has lasting value to our culture and company.

WHAT?! When did he decide this? When did producing low-quality animated films, isolating two of the most creative companies in Hollywood (Lucasfilm and Pixar), destroying several television networks, slaughtering the company's flagship theme parks, slapping characters on every piece of available merchandise, and basically defacing the company name count as creativity? Of course, some of the world's greatest painters were insane... but Eisner is no great painter.

Regardless of when he retires, the board needs to be replaced. The company needs to be restored. The business people that don't understand the Walt Disney Company's heritage and purpose need to transfer to another company. Under Eisner, the name "Disney" has become synonymous with "cheap, badly designed crap." Necessary change will take more than a different CEO.

I AM SO HAPPY!!!!!!!!!!!!!!!! YAYAYAYAYAYAYAY!!! no more eisner HAHAHA~~~ its the moment i have been waiting for all my LIFE! wahoo.

*sings* ding dong the dork is dead...

CalPERS Issues Statement on Resignation of Disney's Michael Eisner

SACRAMENTO, Calif.--(BUSINESS WIRE)--Sept. 10, 2004--Sean Harrigan, President of the California Public Employees' Retirement System (CalPERS) issued the following statement today about the retirement of Michael Eisner, Chief Executive Officer of The Walt Disney Company:

"Eisner's resignation as CEO is the right move for shareowners. We believe he should resign from the board as well. It is not clear to us how a two-year lame duck CEO will benefit shareowners, and his continued presence on the board would prevent the company from the clean break that is needed to restore investor confidence.

On behalf of CalPERS, I want to renew our call for the Disney Board to reveal as soon as possible their CEO succession plan. Working with the coalition of public pension funds on Disney issues, we intend to closely monitor further developments and will continue to engage constructively with the Board of Disney on all the issues related to long-term performance."

http://www.amusementbusiness.com/amusementbusiness/industrynews/article_display.jsp?vnu_content_id=1000628909



However, since 1997, Disney's stock momentum has "significantly lagged" the company's peer group "in sympathy with slower revenue, (cash flow) and earnings growth," Reif Cohen said.

Growth since 1997 in such key media financial metrics as revenue and cash flow also has clearly underperformed such competitors as Time Warner, Viacom and News Corp., according to the analyst's calculations.

The bottom line also has been a concern for Disney investors. "Earnings have struggled over the past eight years and will likely only get back to 1997 levels in 2005," said Fulcrum Global Partners managing director Richard Greenfield. "How fast can Disney grow from there forward" is the key question, he said.