Roy Disney/Stan Gold response to Eisner announced step down

[WDSearcher]

Originally posted by manning
The directors have been put on notice. Now they have to figure out what Roy and Stan have and how much are they personally willing to risk. Roy and Stan are saying to them we may have a provable case and we may go after the company AND the directors. There's an interesting poker hand being played here.

Please. The directors were "put on notice" months ago. Roy and Stan have been saying that they have a provable case for months and have been threatening to go after the company and the directors for months. Neither side has done squat, really. The board may be doing things in the board room that aren't evident to the public, and Roy and Stan may be having strategy meetings that no one else is privvy to, but there's no excitement here at all. That all ended a couple of days after the board meeting. It's obvious that the board isn't scared of Roy and Stan, and it's obvious that Roy and Stan's original plan hasn't panned out.

Interesting? This is the most boring hand of poker I've ever seen! Both sides are holding their cards annoyingly close to their chests, no one is willing to go "all in", and they're just sitting there, waiting to see who folds first.

 

[manning]

Interesting? This is the most boring hand of poker I've ever seen! Both sides are holding their cards annoyingly close to their chests, no one is willing to go "all in", and they're just sitting there, waiting to see who folds first.

Interesting. Who folds/calls/bets first???

 

[raidermatt]

Putting this off on vengeance is a ridiculous assertion, especially given how its been stated that all of the accusations of Eisner's personality conflicts with people like Jobs mean nothing... that its all about money.

The lack of consistency in this line of reasoning just destroys anyone's credibility who insists on using it.


And, yes, the threat of a lawsuit is a tactic, and yes, its obvious that both sides know it. The point isn't whether the suit will actually be brought, or won. The point is whether the overall threat pushes investors further to one side or the other.

Its not an all or nothing move that stands in isolation. Its one of many meant to rattle confidence in Eisner and his ability to pick a successor.

Obviously these things have had the intended effect, as evidenced by the shareholder vote at the last meeting, the continued publicity, and the fact that Eisner feels he must continue to counter.

The only question is whether the effect will be great enough to actually change the course of events.

If Eisner leaves prior to the end of his contract, or anyone other than Iger is named CEO, then it becomes clear that at least some measure of change was affected. I have no doubt that without the Roy/Stan challenge, Eisner would not have announced he would not seek another contract yet, and that he would have had little trouble getting Iger appointed CEO.


Sidenote.... Charimen Mitchell reaches mandatory retirement age in '05, about a year before Eisner's contract ends.

 

[crusader]

Putting this off on vengeance is a ridiculous assertion, especially given how its been stated that all of the accusations of Eisner's personality conflicts with people like Jobs mean nothing... that its all about money.

English Matt, please.

I don't get how Roy's quest isn't about vengeance based on this.

He wouldn't be doing this if he wasn't shown the door.

Sidenote.... Charimen Mitchell reaches mandatory retirement age in '05, about a year before Eisner's contract ends.

That's not going to matter. The clocks ticking now.

 

[raidermatt]

He wouldn't be doing this if he wasn't shown the door.

This did not begin with him being shown the door. That was merely an escalation point.

He was working to bring about change from within the Board. That is what brought about Eisner's decision to boot him.

That's not going to matter. The clocks ticking now.

It may not matter, which is why I called it a sidenote. However, it does raise some interesting issues. For instance, there will need to be a new Chairmen at that time, unless the mandatory retirement age is waived. However, waiving it would look pretty bad since that was the reason given for Roy's ouster.

May just be an interesing sideshow.

 

[Bstanley]

I don't get how Roy's quest isn't about vengeance based on this.

It's true that Roy wouldn't be doing this if he hadn't been shown the door, but it's not vengeance - it's just being appropriate/legal.

When Roy was on the board he was working to have The Big ME removed (obviously - since it got him 'fired') and also to have different directors on the board. You didn't hear about what he was doing because it would not have been appropriate to air Disney 'dirty laundry' - as a Board member and an officer of the company he had a fiduciary responsibility to the company and talking the company down would have breached it.

Once he was no longer an officer of the company he was free to act in whatever manner he chose. Speaking plainly about the management and the board - including the possibility of legal sanctions is appropriate. He probably warned about the same things in the board meetings.

 

[manning]

One interesting sidenote: When Eisner's employment agreement was amended and restated in June 2000 guess who signed it as Chairman of the Executive Performance Subcommittee?

He was most likely executing the duty of the position and direction of the board.

 

[crusader]

When Roy was on the board he was working to have The Big ME removed (obviously - since it got him 'fired') and also to have different directors on the board. You didn't hear about what he was doing because it would not have been appropriate to air Disney 'dirty laundry' - as a Board member and an officer of the company he had a fiduciary responsibility to the company and talking the company down would have breached it.

Yeah.

Here's my point. I understand why Roy took this public last year. I commend his success in what he accomplished.

But now that Eisner has announced he's leaving why continue this fight for his removal? I keep hearing the one reason - two years is too long. I'm not sure I buy that, given how fast this past year went by. How long did it take to sign Wells and Eisner in the first place?

If they take legal action, they won't achieve anything before the contract expires - and they know this! So why are they really playing this hand? I think it's to make the guy suffer and ultimately pay for what he did.

 

[WDSearcher]

Originally posted by crusader
If they take legal action, they won't achieve anything before the contract expires - and they know this! So why are they really playing this hand?

Because they don't have anything else. They don't, as far as the public knows anyway, have any sort of a plan. If Roy and Stan had a plan of exactly how to "Save Disney" (since most of us have decided that just getting ME out probably isn't going to instantly turn things around and re-open the Wonders of Life or put more theming in to Pop Century), then now is when they need to start getting those details out. Instead, the website just regurgitates news and Roy and Stan keep repeating over and over again, "Get him out now;" "Two years is too long."

If they want to help, why not talk to those members of the board who they have no issue with (the ones they didn't campaign against) and start discussing possible candidates and actions. Shore up those votes now. Why not start trying to work with, instead of so hard-headedly against, the board? Why not announce their short list instead of answering questions with runaround comments like, "I'm not saying there is a list, but if there were, he'd probably be on it." HUH? They need to take Eisner's retirement in 2006 and just accept it, then move forward with a plan for what's going to happen next. That's the thing they've always been shy on -- the "what's next" part. And, with no plan in place, the only thing you have left is to go back to the last place you DID have a plan, which was "get rid of ME."

 

[Bstanley]

I think it's probable that Royz Boyz are continuing to agitate and possibly litigate because they have no confidence that the present Board will consider the sort of candidates (for CEO or for the Board) that The SaveDisney constituency wants.

The SaveDisney goal (IMHO) is to get 'their' slate of Board candidates a place on the ballot next time around. I'm not a corporate lawyer (nor do I play one) so I don't know exactly how one would go about that in Disney's case, but I suspect one way to force an outside slate of candidates onto the ballot may be to demonstrate that the present Board is not acting in the best interests of the company.

And given the volume of voting against the existing board members at this past meeting I think a SaveDisney slate would have an excellent shot at being elected - and that is the real prize.


PS: It took 197 days from Roy's resignation from the Disney board in 1984 until the Board meeting where The Big ME and FW were voted in.

 

[crusader]

I don't think the volume will increase in terms of votes this time around. It'll decrease.

They need the fund managers on board.

Politically, that'll take motivation beyond a count me in handshake. That'll take selling seats on a short list.

Again, if it all comes down to saving disney, are we?

 

[WDSearcher]

Originally posted by Bstanley
I think it's probable that Royz Boyz are continuing to agitate and possibly litigate because they have no confidence that the present Board will consider the sort of candidates (for CEO or for the Board) that The SaveDisney constituency wants.

The SaveDisney goal (IMHO) is to get 'their' slate of Board candidates a place on the ballot next time around.

Great. Tell me who they are and I'll tell you if I, as a stockholder, am likely to vote for them. Royz Boyz may have no confidence in the Board, but at least the Board is telling me what they're doing. How can the present Board "consider the sort of candidates that The SaveDisney constituency wants" when the SaveDisney constituency has yet to offer up a single name?

 

[Bstanley]

Crusader:

'Volume' was a poorly chosen word on my part - With an actual set of candidates to vote 'For' this time, instead of just 'NO' for the existing crew as it was last time, I think the present Board members could be defeated.

Yes the Fund Managers will need to be onboard.

Yes it will take getting buy-in on the candidates by major players - perhaps even taking their direction on some candidates.

Can it 'Save Disney'? Well first we would all have to agree on what Disney is - what are the odds of that?

The present Disney Board and CEO have demonstrated for about the last 10 years or so that they simply do NOT have the long term interests of what 'I' consider 'Disney' at heart. Instead of the moderately large, financially successful Content Provider/Resort operator/etc of 1994 we now have the giant, financially fragile Media 'Empire' of 2004. Why? Well that's a whole other debate - but Yes I believe that a new Board and a new CEO might be able to 'Save' MY Disney - to return some Magic to the parts of the company that have been short-changed of late.


WDSearcher:

Yes - SaveDisney does need to get their ideas and candidates out. The next Stockholders meeting is when? At least several months before that they need to have firmed everything up - and started campaigning. I can only assume that the aren't able to say anything right now because they don't know - like I said - I'm not even sure how they get their slate on the ballot. And obviously my guesses could be way off base here - I do not have Shamrock Holdings on my speed dial...

 

[crusader]

Bruce -

I wish I could feel as optimistic about a new team. Right now my main concern is the vulnerability of the company. What can Roy and Stan bargain with to solicit support from the fund mangers?

All those guys really care about is the stock performance.

Any class action litigation will adversely impact investor confidence, which could put the company back in play - not a situation I want.

And now that Roy and Stan have an even greater need to be taken seriously, that makes them an easy target. The more this game is bent on winning, the less it becomes about the survival of the company.

 

[raidermatt]

Look, I've said this before.... I am disappointed with Roy/Stan's lack of apparent plan after the Board meeting of several months ago.

That doesn't mean that they should have announced an alternate slate of directors and/or CEO candidate by this time. The next board meeting is still 7-8 months away, and as bstanley said it is too early to expect candidates at this time.

Of course if they are not able to actually produce a viable slate, it will definitely be a failure on their part.

Why continue the fight even though Eisner has announced he's leaving in 2 years? Because like it or not, 2 years IS a long time. Further, without continued pressure, there is less of a chance that the Board will fulfill their fudiciary duty in spirit, as opposed to just by the letter of the law.

With no pressure, Iger is a shoe-in.

Vulnerable? C'mon... the company is somewhat vulnerable, but that's primarily due to 10+ years of underperformance. Roy/Stan are not going to make that any worse, particularly after Comcast wasn't able make things work back when Eisner looked extremely vulnerable, and the thought of an actual alternative to his and Iger's leadership was not even on the drawing board.

'Volume' was a poorly chosen word on my part - With an actual set of candidates to vote 'For' this time, instead of just 'NO' for the existing crew as it was last time, I think the present Board members could be defeated.

I agree, though it all depends on who those candidates are.

If they want to help, why not talk to those members of the board who they have no issue with (the ones they didn't campaign against) and start discussing possible candidates and actions. Shore up those votes now. Why not start trying to work with, instead of so hard-headedly against, the board?

I'm not an expert on this, but I'm sure there are issues with them having discussions with certain members of the board, and expecting those conversations to remain confidential. However, I'm sure that those conversations are happening, to the extent they are allowed, provided there are directors willing to make a stand when the time comes.

Regardless, those conversations are not going to be posted on the website, just as Eisner and the board don't post their detailed plans either.

Remember, Roy/Stan DID work with the board... they WERE part of the Board. But Roy was kicked out by the board at Eisner's behest. The idea that the Board will act independently of Eisner is at the heart of the entire problem. If it were as simple as just reasoning with some of them, we probably wouldn't be in this situation.

 

[crusader]

Matt the company is more than "somewhat" vulnerable and yes, it has to do with the past decade.

They are extremely vulnerable now. You've got two ex-board members (one of them Roy Disney) openly soliciting votes and attempting to formulate a new regime to regain control of this company. No doubt they're shooting for the best, but with what? They're not in a position to guarantee anything.

That leaves them wide open for the taking.

Why would a candidate who really wants the job choose to be interviewed by the guy that can't hire him?

 

[Bstanley]

Well Crusader I think that the slate of Directors is what folks are waiting for. Unlike 1984 this time around there isn't anyone with the financial gravitas to slam dunk the situation by buying 25% of the company - so it will continue to bubble until the coalition can be built.

The Disney Board is regarded with a great deal of skepticism by many financial people - not just by Disney wonks like us. There were many articles about the insular nature of the Disney Board - even before Roy got let go.

So I imagine that putting forth a few choice names to replace some of the exisiting board is all the leverage they need.

Also - IMHO - the reason the company is staying in play is NOT because Royz Boyz continue to rattle their sabers, it's because of the underlying fundamentals. The existing management and board threw great wads of money away on ill-considered ventures and neglected the businesses that made Disney great. Unless the fund managers see this stopping, and perhaps even reversing, Disney will stay in play.

 

[crusader]

I think you're right Bruce. The slate is what everybody's waiting for.

And yeah, if these two put together a dream team of the industry's finest, impervious to negative publicity and actually strong and independent with no hidden agenda, who wouldn't jump at it.

The downside is having your name on a list that could potentially damage your reputation. We're talking some pretty big egos.

I keep going back to the question: what are Roy and Stan bargaining with to get someone to consent to be outed this way.

We live in a different time. The 24 hr news is brutal. Unless you want your resume trashed and your name dragged through the mud you're going to seriously weigh the consequences of engaging in an internal battle for power - particularly one where the Chairman is one of the most reputable, prominant and highly revered key figures within the Democratic party.

 

[raidermatt]

I'll quote bstanley since he said it perfectly:

Also - IMHO - the reason the company is staying in play is NOT because Royz Boyz continue to rattle their sabers, it's because of the underlying fundamentals. The existing management and board threw great wads of money away on ill-considered ventures and neglected the businesses that made Disney great. Unless the fund managers see this stopping, and perhaps even reversing, Disney will stay in play.

Roy and Stan going away would not strengthen Disney's defense at all. In fact, it might even weaken it, since a potential suitor would have less competition and one less headache to deal with.


I do agree that getting legit candidates to sign on with Roy/Stan is going to be difficult, though you are overstating some of the reasons.

But yes, it will be difficult. If they can't do it, the point will be moot, and Roy/Stan will have to settle for the small changes in the process they have already achieved, along with a few others in the future.

If they CAN do it, then the outcome is truly up in the air, but at the least Eisner's influence over the events will be further reduced.

 

[WDSearcher]

Originally posted by raidermatt
Roy and Stan going away would not strengthen Disney's defense at all.

True. But if Roy and Stan would put some energy into trying to work WITH the board instead of putting so much energy into working against them, it would be the best of both worlds. Roy and Stan would be seen as two guys who truly want to do what is best for the company because they're willing to step above the pettiness of the Eisner fight to do it. And the board wouldn't be able to say "no" to their help, if offered genuinely, without looking like the closed-door elitist group they've been accused of being.

Roy and Stan's continued threats of lawsuits and their continual chiming in of "get rid of Eisner now" only leads the board to be defensive and fight back instead of moving forward. They're sitting there working on responses to each other's official statements instead of doing the work at hand.