Statement of BOD following Meeting - Thought?

[Goofyposter]

Statement of The Board of Directors of The Walt Disney Company
September 21, 2004 5:30:00 PM ET

At a regularly scheduled meeting which concluded today, the Board of The Walt Disney Company took the following actions:

1. The Board reaffirmed its strong support for Michael Eisner, Bob Iger, and the entire management team. The Board noted that the Company's performance has been strong, with a greater than 50% increase in earnings projected in the current fiscal year and, barring a downturn in the environment, double-digit growth in earnings targeted through at least 2007. The Company is also on track to deliver record free cash flow in fiscal 2004, up from the previous record set last year.

The Board took special note of the fact that today marks the 20th anniversary of Michael Eisner's service as Chief Executive Officer. The Board formally acknowledged Michael's recent decision regarding the CEO position, thanked him for his outstanding creative leadership, and looks forward to his continued leadership through the rest of his tenure.

The Walt Disney Company's condition and prospects are excellent. It has strong and effective leadership. The Board is committed to keeping the Company on the right path, the creative path, the path to attractive economic returns and value creation for our shareholders.

2. The Compensation Committee approved a redesigned Management Incentive Bonus Program for its senior executives and managers to further clarify and formalize the company's practice of linking executive compensation and performance. The Management Incentive Bonus Program is one component of the company's overall executive compensation program, which also includes salary and long-term incentive compensation.

Under the new program, which takes effect for Disney's 2005 fiscal year beginning October 1, 70% of the annual bonus compensation determination for the most senior corporate executives and 70% of the bonus pool determination for other corporate executives and managers will be based on performance against specific financial measures established at the outset of each fiscal year by the Compensation Committee. For fiscal year 2005, the company-level financial performance metrics relevant to the bonus and bonus pool determinations will include targeted levels of operating income, economic profit (operating profit after taxes and a charge for capital employed), after-tax free cash flow and earnings per share.

The remaining 30% of the determination will be based upon the Committee's assessment of other individual, company-wide or business segment performance objectives. The most senior corporate executives' bonuses will also be subject to further adjustment up or down by as much as 20%, depending upon how the company's earnings per share (EPS) performance for the year compares to EPS performance of the Standard & Poor's 500 Index of companies over the same period.

In the case of the most senior executive officers, the new program will be subject to additional performance criteria and payment limitations under the Company's 2002 Executive Performance Plan, as approved by the Company's stockholders, allowing these bonuses to be tax deductible to the Company under Section 162(m) of the Internal Revenue Code.

For executives and managers at the company's business segments, 50% of the bonus pool determination will be based on segment-level financial performance and 50% will be based on performance against the company-level financial goals and other objectives.

"By further clarifying and making more formal the company's practice of linking bonus compensation and financial performance, the Board is underscoring its commitment to strong governance and to motivating and holding accountable the management team in a way that drives meaningful shareholder value," said Judith Estrin, Disney director and chair of the Compensation Committee. "The Compensation Committee and the Board believe this redesigned bonus compensation program will allow Disney to attract, retain and motivate the best talent in the world by rewarding outstanding performance while ensuring that the company's leaders' compensation is thoroughly aligned with the interests of shareholders. The plan focuses on the key drivers of long term shareholder value and will help reinforce management's commitment to these important financial metrics."

For more information on Disney's redesigned Management Incentive Bonus Program, see www.disney.com/investors.

3. The Board will engage in a thorough, careful, and reasoned process to select as the next CEO the best person for the company, its shareholders, employees, customers, and for the many millions of others who care so much about The Walt Disney Company. The Board is keenly aware of the special place our company holds in the hearts of people all over the world and the importance of its responsibility in choosing a CEO.

To achieve its objective, the Board will:

-- 1. Engage an executive search firm to assist it in selecting a CEO who possesses the qualities and experience the Board believes are necessary for this important position.

-- 2. Consider both internal and external candidates. Bob Iger is the one internal candidate. He is an outstanding executive and the Board regards him as highly qualified for the position. However, the Board believes that the process should include full consideration of external candidates as well.

-- 3. Complete the process and announce a successor as soon as possible, with an expected date of completion of June 2005.

-- 4. Michael Eisner and the Board will work to assure a smooth and effective transition.

The Board regards its responsibility on succession as so significant that all members should participate actively and fully in the entire process; and each has committed to do so.

4. Directors are elected for a one year term. The Board's retirement policy provides that "no Director may stand for reelection following the calendar year in which that Director turned 72 years of age." Senator Mitchell will turn 72 in August 2005. He has informed the Board that, if elected a Director at the 2005 annual meeting, he will act in accordance with the Board's policy and not stand for reelection at the 2006 annual meeting.

Following its announcement of a successor CEO, the Board will engage in thorough, careful, and reasoned review and will then select and announce a successor Chairman.

FORWARD LOOKING STATEMENTS

Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are made on the basis of our views and assumptions regarding future events and business performance as of the time the statements are made and we do not undertake any obligation to update these statements. Actual results may differ materially from those expressed or implied. Such differences may result from actions taken by the Company, including restructuring or strategic initiatives and information technology improvements, as well as from developments beyond the Company's control, including international, political, health concern and military developments that may affect travel and leisure businesses generally and changes in domestic and global economic conditions that may, among other things, affect the performance of the Company's theatrical and home entertainment releases, the advertising market for broadcast and cable television programming, expenses of providing medical and pension benefits and demand for consumer products. Changes in domestic competitive conditions and technological developments may also affect performance of all significant company businesses. Additional factors are set forth in the Company's Annual Report on Form 10-K for the year ended September 30, 2003 under the heading "Factors that may affect forward-looking statements."

Contact Information: The Walt Disney Company
Zenia Mucha, 818-560-5300 John W. Spelich, 818-560-8543

© 2004 BusinessWire

 

[Sarangel]

So much for Stan & Roy having any influence on the BOD... I still hope this all works out for the best, but I'm concerned that that they are still focused solely on the bottom line. I know that's important, but I guess I was hoping that they would say something about quality of product...

Sarangel

 

[lodgelady]

It seems to me that they went out of their way in the first paragraph to stick a thumb in Roy and Stanley's eyes. With this statement they are saying the BOD are gonna do what they are gonna do regardless. Yup, Eisner is THEIR man! I wish they had acknowledged that there has been shareholder unrest.
The statement that they are aware of how important Disney is to people was good. The plan to open up the search is very good(oh, please,please,please NOT IGER!!!)
There appears to be a bow to the pressure to at least appear to be following good governance practices (i.e. to have more in common with a democracy than a communist government )
I think Roy and Stan can be proud that at least their agitation has assured an executive search will take place.

 

[DisneyKidds]

The fact that the BOD has established a goal of June 2005 for announcing Eisner's successor is a little encouraging. Somehow I doubt the successor will wait around for a year after the announcement for Eisner to retire. Even in a transition period, the incoming CEO would probably dictate direction. Of course, if Iger is the replacement all of that is moot. He's Eisner's boy, will do Eisner's bidding, and may even wait the year to assume real control. But if the replacement is from the outside.............

So yes, the announcement does thumb it's nose at Roy and Stan in the BOD standing firmly behind Eisner, but at the same time they state that they want to announce the successor and make (or at least start) the transition before Eisner's contract is up.

I just hope they don't throw Eisner the Chairman position as a way of keeping him at the top when he's no longer CEO .

 

[Sarangel]

I just hope they don't throw Eisner the Chairman position as a way of keeping him at the top when he's no longer CEO

Don't worry DK, Eisner's already said he won't go that route.

Sarangel

 

[DancingBear]

The Board really took the winds out of SaveDisney's sails on their veiled lawsuit threat by saying they will hire a search firm, look for outside candidates, and complete by June, 2005.

 

[DisneyKidds]

Don't worry DK, Eisner's already said he won't go that route.

Like I believe anything Eisner says .

The Board really took the winds out of SaveDisney's sails on their veiled lawsuit threat by saying they will hire a search firm, look for outside candidates, and complete by June, 2005.

DB, I don't think they took the wind out of anything. In fact, they validated the concerns of SaveDisney. I think the BOD would have taken this course regardless, but SaveDisney might even spin it that the BOD decided to act on replacing Eisner much sooner than 2006 because of their pressure. I don't think Roy and Stan wanted to file a lawsuit any more than we thought they should have. They wanted to make sure that a search began immediately and that Eisner's successor would be in place sooner than 2006. That is happening......therfore no need for further threats of lawsuits.

Now, if the BOD names Iger, well then it could get interesting. Would Roy and Stan challenge that choice in open court? Hmmm........

 

[Peter Pirate]

Kidds, you're listening to too much heresay re: Iger and I'm surprised. The biggest negative in Iger's record is the inability to turn around ABC (as it was his baby). But as I keep saying no one really know what Iger will do, do they?

Let's look at it this way, if you were hired by Disney and worked near the top of the food chain it probably wouldn't have taken you long to figure out that (1) agreeing with Eisner = Good, disagreeing with Eisner = bad. You'd probably notice that those whose egos clashed with Eisner didn't...What? Yes, that's right, stay around too long. You'd probably notice that by following the corporate line you would? Yes, again you've got it, stay around, collect bonuses and get promoted. Could Iger be blamed for playing the game? His job with a huge Corporation like Disney was a plum, and now he'd like his shot for playing the game.

So what can this specifically say about what Iger will do? I don't think it says much at all. But IMO, all Iger has done is shown a great talent for survival. We have already heard from many sources that management style under Iger will be vastly different in it's decentralization, which I think would allow individual managers much more freedom to accentuate their opinions and wouldn't we all like to see Ouimet and Weiss given even more freedom? We've heard that Iger's ego is minimal (at least compared to ME, I'd suppose) which again I would hope would translate into hiring the right people to do the right job.

The biggest fear that I see with Iger is whether he actually learned what Disney is all about from Eisner or was he smart enough to learn what it was all about from being around Eisner...

I think he knows Disney best and should be given the benefit of the doubt.

 

[DisneyKidds]

You are right Pirate.......we don't know what he'd do. If a search is conducted and he's the best candidate he may deserve the shot. However, if other just as qualified candidates are identified, I'd prefer to see someone who wasn't Eisner's right hand man get the job. Often such candidates will bring with them their predecessors ideas, beliefs and styles....and that is what we're trying to get away from. Maybe he wouldn't, and if he truely is the most qulaified then so be it.......we'll have to wait and see if that is the case.

 

[Bstanley]

Less ego sounds good.

I would like to know how many times Mr. Iger has visited DL and/or WDW - without an entourage - just took a day or two to wander around the place.

Also - any indication about how he interacts with the creative folks?

 

[DancingBear]

Originally posted by DisneyKidds
DB, I don't think they took the wind out of anything. In fact, they validated the concerns of SaveDisney. I think the BOD would have taken this course regardless, but SaveDisney might even spin it that the BOD decided to act on replacing Eisner much sooner than 2006 because of their pressure. I don't think Roy and Stan wanted to file a lawsuit any more than we thought they should have. They wanted to make sure that a search began immediately and that Eisner's successor would be in place sooner than 2006. That is happening......therfore no need for further threats of lawsuits.

I disagree. Although I don't think Stan and Roy would have brought suit, now they appear to have very little to jump up and down about until June 2005.

Now, if the BOD names Iger, well then it could get interesting. Would Roy and Stan challenge that choice in open court? Hmmm........ [/QUOTE]I don't see how you could claim the Board breached its fiduciary duties by selecting Iger after a due process search. He's certainly not clearly UNqualified for the position.

 

[Peter Pirate]

Bruce, in a discussion of Iger (somewhere, sometime), I recall it being said that he didn't visit the parks regularly, which was of concern to the disneyphiles, but it was pointed out that the Parks were NOT under his review...So it's kind of like damn I sure wish he'd have given some interest, but still, if it wasn't his job...

Also, I recall talk that the creative folks do like him as he's laid back and not always just looking for something to make him look good...Kind of, just a nice guy.

My information is just recollection of past discussions and readings on the net, so it certainly isn't 100% and I'd love to hear some firsthand stories if anyone has any.

 

[raidermatt]

There's just no real evidence to support the idea that Iger is the right choice at this point. As DB points out, he is probably qualified from a fiduciary pov, but truly being the best candidate is another question.

We can't be asking why SHOULDN'T he be chosen... If we want to form any kind of informed opinion, we have to ask why SHOULD he be chosen over every other candidate out there.

Given that the Board's record of idependent thought is sketchy at best, a reasonable person has to view their actions and statements with a critical eye at the least.


So I'm not going to write Iger off yet, but at this point, he deserves nothing more. In fact, his close association with Eisner has to be addressed... maybe he isn't just an Eisner clone, but we need solid evidence to that affect, as well as evidence of his ability to run critical business areas that he has not managed in the past.

And yes, any other candidate needs to be put through the same scrutiny.

 

[Peter Pirate]

That's OK with me, too...I don'tmean to be totally pro Iger as I don't know that much about him (like all of us?)...But I certainly don't like the innuendo that Pressler may be on the short list either.

 

[crusader]

I don't know enough about Iger to say one way or the other. At the very least, he should be shown the ropes during this interim period and given a fair shot.

What I saw of him on the surface was fairly seasoned - all business - articulate.

 

[wdw4us2]

In light of the Boards' statements, I'm wondering if Roy & Stan are now trying to put together an alternate slate of board members before next year's annual meeting.

Given their lack of comment since the Boards' statement, I would hope that they are doing something. The Boards' statement just proves what has been Roy & Stan's biggest complaint all along - the board does not act independently of Ei$ner.

 

[DisneyKidds]

they appear to have very little to jump up and down about until June 2005.

I don't see how this takes the wind out of their sails. Really, unless you think they desire nothing more than to have something to jump up and down about they should be happy. They felt Eisner was the wrong man for the company. They wanted him out. He has announced he's going in 2006. The BOD pushed that up by starting a search immediately, with a successor to be named in 9 months, a full year before Eisner wanted to leave his office. Sounds more like mission accomplished to me than defeat, unless of course you think they had another mission in mind.

No doubt Roy and Stan will be all over the BOD search process to make sure it moves forward independantly and considers all qualified candidates, but other than that, there is no need to jump up and down.

I don't see how you could claim the Board breached its fiduciary duties by selecting Iger after a due process search.

I'm not saying that will be the case. If due process is followed and the BOD acts independantly I'd be hard pressed to argue with the result. Roy and Stan may view that differently.....and they may have more insight and a different take on just how independantly the BOD is capable of acting.

It will be interesting to see how it all plays out.

 

[Bstanley]

Peter - you know - I actually don't care if Mr. Iger has tried to take a 'business' interest in the parks - BUT, I would be ecstatic to learn that he actually enjoyed visiting them for pure enjoyment.

I was just remembering a statement that was attributed to PPressler when he was appointed head of Disneyland:

...Oh, I guess I'll have to visit the park now...

Obviously the man had no real understanding of what 'Disney' was about.

I would like the next CEO of Disney to at least be able to enjoy what the company produces - is it too naive to hope that a 21st Century CEO steeped in derivatives and ROI can still get excited by visiting DL?

 

[Peter Pirate]

Thanks for clarifying your concern Bruce. I agree. I would love to hear some positve first hand comment regarding Iger actually liking the product, especially the Parks. I love to hear the Ouimet stories at DL. They breed hope,

 

[ohanafamily]

Hi all, I've kind of been lost on the CB, but I agree; I think that we should make sure of a thorough search. If Iger is the best man, nothing will stop him.

I would also love to see an alternative slate of directors fron Roy&Stan. I would support it.....