Tensions Persist Between Eisner And Roy Disney
By Bruce Orwall
WALT DISNEY Co. Chairman and Chief Executive Michael Eisner emerged from a crucial board meeting recently with unanimous backing for his long-range plan and a continued grip on the job he has held for 18 years. But peace has not yet been restored to the Magic Kingdom.
Mr. Eisner spent much of the summer sparring with two key Disney board members, Vice Chairman Roy E. Disney and Mr. Disney's investment adviser, Stanley Gold. Both have been critical lately of the entertainment company's faltering performance and lack of management depth. The tensions climaxed at a two-day board meeting in late September. The board endorsed Mr. Eisner's strategic plan, but fallout from the meeting has continued.
Some senior managers at the company, especially President Robert Iger, grew frustrated at the public perception that they have been ruled out as future Disney leaders. And people familiar with the company say that since the meeting, it has been apparent that Mr. Eisner's relationship with Messrs. Disney and Gold is on thin ice that could crack at any time.
That is striking given their shared history. Messrs. Gold and Disney played a major role in giving Mr. Eisner his job in 1984 and supported him through a variety of crises through the 1990s. They began pressuring Mr. Eisner earlier this year as Disney's share price sank to eight-year lows, diminishing the value of Mr. Disney's 17.5 million shares in the company. But even then, the two sides were in regular contact as they tried to work out their differences.
That dialogue has been sharply curtailed since the September meeting. At that session, according to people familiar with the matter, Mr. Eisner sought to get rumors of management instability at the company into the open. He directly confronted Messrs. Disney and Gold over what he said was their lack of confidence in Mr. Iger as a possible successor to him. Mr. Eisner has also told Messrs. Gold and Disney that he believed they wanted to replace him, as well. Mr. Gold, meanwhile, made a presentation to fellow board members that was sharply critical of the company's recent performance under Mr. Eisner.
In the aftermath, everyone involved has been left in an awkward position. Mr. Eisner has fended off the challenge from Messrs. Disney and Gold for now, and the company has recently had some much-needed successes, including signs of modest improvement at its struggling ABC network, the hit movie "Sweet Home Alabama" and a World Series win by its Anaheim Angels baseball team.
But Mr. Eisner has yet to prove that he can repair Disney for the long haul, and he is stuck with two high-profile board members whose discontent is not a secret. A big run-up in Disney's stock price is perhaps the only cure, but while Disney is up more than 35% from its 52-week low of $13.48, at $18.55, it is still far off its high of $25.17.
While Messrs. Gold and Disney criticized the company's performance, they did not offer strategic alternatives or suggest a successor for Mr. Eisner, according to people who attended the meeting. Some directors have since privately expressed irritation at the actions of the two men.
Disney's directors meet next in early December, when they are expected to continue discussing corporate governance issues that include a reduction in the size of the company's 16-member board. Also complicating the situation is the fact that Mr. Disney recently told associates that he is reducing his schedule because of a minor heart condition, though he continues to be involved in the company's animation division.
The boardroom confrontation has had other consequences, as well. The perception that there are no worthy in-house succession candidates to Mr. Eisner has taken a toll on management morale that was already shaky because of the company's poor performance and the stream of top executives who have left Disney.
Colleagues and friends say the situation has been particularly difficult for Mr. Iger, who was upset by the notion that he had already been ruled out for a job he hadn't yet sought. Mr. Disney even sent Mr. Iger a note indicating that he found the boardroom discussion of Mr. Iger's role regrettable.
Some of that sting has worn off, and a company spokeswoman says that Mr. Eisner's support for Mr. Iger "has been and remains steadfast and unquestionable." Mr. Iger has continued to work diligently at his job, including efforts to fix the struggling ABC network and a recent trip to China to work on theme-park issues.
The criticisms about Disney's alleged lack of in-house succession candidates were also a factor -- though not the deciding one -- in Disney theme-park chief Paul Pressler's October decision to accept a job as chief executive at Gap Inc., according to people familiar with the matter.
Mr. Pressler, too, was considered a top prospect to move up and possibly even succeed Mr. Eisner one day. Mr. Eisner had within the past year discussed with him the possibility of taking a top management job at the company's ABC network as a way of broadening his experience, but no move materialized.
By most accounts, the recent meeting was never uncivil. But at the same time, Mr. Eisner showed he was willing to play hardball to get his way.
To prod the board into issuing a statement reflecting its unanimous backing of his strategic plan, Mr. Eisner read what he said was an e-mail from a journalist to Disney's corporate PR department that suggested that Mr. Gold's representatives were preparing to spin their version of events to reporters. A spokesman for Shamrock Holdings, Mr. Disney's investment vehicle, denies that it engaged in such conduct. But subsequently, the statement of solidarity was issued.
By Bruce Orwall
WALT DISNEY Co. Chairman and Chief Executive Michael Eisner emerged from a crucial board meeting recently with unanimous backing for his long-range plan and a continued grip on the job he has held for 18 years. But peace has not yet been restored to the Magic Kingdom.
Mr. Eisner spent much of the summer sparring with two key Disney board members, Vice Chairman Roy E. Disney and Mr. Disney's investment adviser, Stanley Gold. Both have been critical lately of the entertainment company's faltering performance and lack of management depth. The tensions climaxed at a two-day board meeting in late September. The board endorsed Mr. Eisner's strategic plan, but fallout from the meeting has continued.
Some senior managers at the company, especially President Robert Iger, grew frustrated at the public perception that they have been ruled out as future Disney leaders. And people familiar with the company say that since the meeting, it has been apparent that Mr. Eisner's relationship with Messrs. Disney and Gold is on thin ice that could crack at any time.
That is striking given their shared history. Messrs. Gold and Disney played a major role in giving Mr. Eisner his job in 1984 and supported him through a variety of crises through the 1990s. They began pressuring Mr. Eisner earlier this year as Disney's share price sank to eight-year lows, diminishing the value of Mr. Disney's 17.5 million shares in the company. But even then, the two sides were in regular contact as they tried to work out their differences.
That dialogue has been sharply curtailed since the September meeting. At that session, according to people familiar with the matter, Mr. Eisner sought to get rumors of management instability at the company into the open. He directly confronted Messrs. Disney and Gold over what he said was their lack of confidence in Mr. Iger as a possible successor to him. Mr. Eisner has also told Messrs. Gold and Disney that he believed they wanted to replace him, as well. Mr. Gold, meanwhile, made a presentation to fellow board members that was sharply critical of the company's recent performance under Mr. Eisner.
In the aftermath, everyone involved has been left in an awkward position. Mr. Eisner has fended off the challenge from Messrs. Disney and Gold for now, and the company has recently had some much-needed successes, including signs of modest improvement at its struggling ABC network, the hit movie "Sweet Home Alabama" and a World Series win by its Anaheim Angels baseball team.
But Mr. Eisner has yet to prove that he can repair Disney for the long haul, and he is stuck with two high-profile board members whose discontent is not a secret. A big run-up in Disney's stock price is perhaps the only cure, but while Disney is up more than 35% from its 52-week low of $13.48, at $18.55, it is still far off its high of $25.17.
While Messrs. Gold and Disney criticized the company's performance, they did not offer strategic alternatives or suggest a successor for Mr. Eisner, according to people who attended the meeting. Some directors have since privately expressed irritation at the actions of the two men.
Disney's directors meet next in early December, when they are expected to continue discussing corporate governance issues that include a reduction in the size of the company's 16-member board. Also complicating the situation is the fact that Mr. Disney recently told associates that he is reducing his schedule because of a minor heart condition, though he continues to be involved in the company's animation division.
The boardroom confrontation has had other consequences, as well. The perception that there are no worthy in-house succession candidates to Mr. Eisner has taken a toll on management morale that was already shaky because of the company's poor performance and the stream of top executives who have left Disney.
Colleagues and friends say the situation has been particularly difficult for Mr. Iger, who was upset by the notion that he had already been ruled out for a job he hadn't yet sought. Mr. Disney even sent Mr. Iger a note indicating that he found the boardroom discussion of Mr. Iger's role regrettable.
Some of that sting has worn off, and a company spokeswoman says that Mr. Eisner's support for Mr. Iger "has been and remains steadfast and unquestionable." Mr. Iger has continued to work diligently at his job, including efforts to fix the struggling ABC network and a recent trip to China to work on theme-park issues.
The criticisms about Disney's alleged lack of in-house succession candidates were also a factor -- though not the deciding one -- in Disney theme-park chief Paul Pressler's October decision to accept a job as chief executive at Gap Inc., according to people familiar with the matter.
Mr. Pressler, too, was considered a top prospect to move up and possibly even succeed Mr. Eisner one day. Mr. Eisner had within the past year discussed with him the possibility of taking a top management job at the company's ABC network as a way of broadening his experience, but no move materialized.
By most accounts, the recent meeting was never uncivil. But at the same time, Mr. Eisner showed he was willing to play hardball to get his way.
To prod the board into issuing a statement reflecting its unanimous backing of his strategic plan, Mr. Eisner read what he said was an e-mail from a journalist to Disney's corporate PR department that suggested that Mr. Gold's representatives were preparing to spin their version of events to reporters. A spokesman for Shamrock Holdings, Mr. Disney's investment vehicle, denies that it engaged in such conduct. But subsequently, the statement of solidarity was issued.