But Shareholders and Board Clash Over Selection

By Published on .

LOS ANGELES ( -- The new guard may look a lot like the old guard at the Walt Disney Co.

Robert Iger, a 30-year Disney veteran and the entertainment conglomerate’s second in command, was named to

succeed Disney CEO Michael Eisner on Sunday. He will take over officially in the fall, when Mr. Eisner will step down and effectively cut his ties to the company he has headed for two decades.

Several candidates
Mr. Iger’s appointment came after the Disney board of directors reportedly approached several executives about the top Disney job. Among those who were considered: Ebay’s CEO Meg Whitman, who was once an executive in Disney’s consumer products division; News Corp.’s chief operating officer, Peter Chernin; and Les Moonves and Tom Freston, co-presidents of Viacom.

The board chose Mr. Iger, who came up through the Capital Cities/ABC television ranks of the entertainment giant and most recently had been its president.

The announcement wasn’t much of a surprise to Disney watchers.

“There had been so little real energy in any other direction,” said Robert Monks, a longtime advocate for corporate-governance reform who founded Institutional Shareholder Services. Mr. Monks has been an advisor to the attorneys for shareholders suing Disney for quickly hiring and firing Michael Ovitz, shelling out some $140 million of the company's money as a severance in the late '90s. The case is ongoing. “Also, Michael Eisner had not been known to train a stable of ambitious up-and-coming executives. There’s been no room for anybody else to be a star in that system.”

Dissident shareholders revolt
The ball started rolling to replace Mr. Eisner about a year ago. Shareholders revolted during an annual meeting, stoked by dissident board members Stanley Gold and Walt Disney’s nephew Roy Disney, who accused Mr. Eisner of mismanagement and a host of other misdeeds. Mr. Eisner was stripped of the chairman title and subsequently said he would not seek to renegotiate his contract when it expires in September 2006.

Mr. Eisner will leave Disney in September of this year, earlier than had been expected. He said that he will not ask to remain on the board nor will he seek the chairmanship, according to a letter he wrote to the board and released by Disney over the weekend.

Search process criticized
Even with his departure, some critics aren’t satisfied. Messrs. Gold and Disney said the search for Mr. Eisner’s replacement wasn’t extensive enough, and they think the board’s choice will mean more of the same instead of the “clean break” needed to move the company forward.

“We find it incomprehensible that the board of directors of Disney failed to find a single external candidate interested in the job and thus handed Bob Iger the job by default,” Messrs. Gold and Disney said in a statement.

Mr. Monks agreed. “Shareholders wanted a process not dominated by Michael Eisner,” he said. “That’s not what they got.”

George Mitchell, chairman of Disney’s board, said in published reports that board members mulled the succession at length and felt Mr. Iger had the experience and ability to lead Disney. He said that among Mr. Iger’s areas of focus will be international growth and new technologies.

Pixar Animation Studios
With Mr. Iger taking the reins, speculation has begun on what effect the management passing of the torch will have on some ongoing delicate issues. Disney’s longtime relationship with Pixar Animation Studios could end next year, after the release of the computer-generated Cars. The two companies have had a string of successes with all-family movies such as Finding Nemo, The Incredibles and Toy Story.

Talks to extend the Pixar deal had stalled because of personal battles between Mr. Eisner and Steve Jobs, Pixar’s chairman. Teh talks are not completely dead, however. Perhaps closer to a resolution is the separation agreement now in the works between Disney executives and Harvey and Bob Weinstein, co-heads of mini-major studio Miramax. Mr. Iger’s ascension isn’t thought to have any impact on the Weinstein deal.

Most Popular
In this article: