Disney thrashPosted: December 13, 2003
I’ve recently been watching the executive thrash at Disney with particular interest. Two board directors recently resigned in frustration for board inaction for dealing with poor shareholder performance by removing Michael Eisner.
From a letter posted by Roy Disney addressed to Eisner:
…this company, under your leadership has failed during the last seven years in many ways: …Your consisten micro-management of everyone around you with the resulting loss of morale throughout this Company. …The perception by all of our stakeholders … 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.
Ouch! More from the second resignee Stanley Gold:
Continuing through March of this year I wrote to express my concerns reagarding the financial performance of the Company …. Instead, Mr. Eisner was awarded a bonus of $5 million in Disney shares … despite objections by Roy and me. I believe that bonuses for senior management must be tied to performance; by that measure, no bonus was warrented.
Ouch #2! This sort of exposure to what’s happening in the internals of a major company board room is remarkable. The two have spun up a simple web site, SaveDisney.com, to get the message out. What they should really do is make it a blog (a-la Howard Dean) and use it as a method to communicate with and give a voice to shareholders. It’s one thing for a few board members to resign (which is big BTW). It’s quite another to have thousands of shareholders steaming angry over what’s going on within the company all open for the public to see and participate. It’ll put even more pressure on the existing directors to deal with Eisner.
As someone who’s been involved with several startups in the past, I’ve gotten the opportunity to see first hand the “rubber stamp” syndrome Gold mentioned in his letter. Conspiracy theories aside, the one thing directors often have with company managers is personal relationships. Just like people give family members the benefit of doubt, I think the same sort of thing happens here. Unfortunately, the ones who end up bearing the brunt are employees and shareholders. A good example where the role of self-interest and markets do not run parallel. What should we do Adam?