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December
2nd,
2003
Stanley Gold, a
key ally of former Walt Disney Co. vice chairman Roy E. Disney,
resigned from the media conglomerate's board Monday, becoming the
second vocal opponent of chairman and chief executive Michael
Eisner to quit the board in two days.
Gold issued a long rebuke
to Eisner and the board, seconding complaints made Sunday by Roy
Disney and further criticizing the board as being a
rubber stamp to senior management.
Gold also repeated Roy
Disney's calls for Eisner to resign.
The two former board members told The Associated
Press on Monday they will speak with large shareholders, financial
analysts and the public for the first time to air the company's
problems.
"I think I have a better chance of persuading
people on the outside to bring pressure on the board," Gold said.
He accused the board of being too cozy with
Eisner, despite the departure of several key Eisner allies over
the past year and the addition of new, independent directors.
"At the end of the day there was no hope of
doing anything," Gold said. "They are all solid in Michael's
pocket."
Gold said it was too early to decide whether he
and Roy Disney would mount a formal challenge by seeking allies
among large shareholders who could force a proxy fight.
"Our job is to talk to people and to educate
them," Gold said. "This company has huge potential. It has a
wonderful history and a wonderful future. But it has lost its
creativity. It has no leadership in Michael Eisner."
Roy Disney said his main concern was the value
the company offered to customers as well as shareholders.
"Our aim is to try to get the company back in a
position to be the leader it has been in the past," Disney said in
an interview.
The nephew of company co-founder Walt Disney
said he has become increasingly dismayed by rides at Disney theme
parks that don't work, rising prices being paid by consumers for
Disney products and movies that carry more objectionable content.
"It's all about my name on it," Roy Disney said.
"I'd like to see the product represent what I believe the name
stands for."
Roy Disney, 73, stepped down from the board of
directors on Sunday and resigned as chairman of Walt Disney
Animation, calling on Eisner, 61, to resign.
"It is my sincere belief that it is you that
should be leaving and not me," he wrote to Eisner.
But the two resignations may have little
immediate impact on the company, which has shown progress fueled
by improvements at its movie studio, ABC Television network and
even at its theme parks, which are gradually recovering from a
worldwide tourism slump.
"Unless they can really offer details that are
truly private in nature, I don't think whatever they will say will
mean new information for most institutional investors," said Paul
Kim, senior media analyst at Tradition Asiel Securities.
Kim said Gold and Roy Disney's complaints may be
valid in the long term, but that Eisner has had to focus more on
boosting the company's share price, which has meant cutting costs
and not spending millions of dollars on new theme park rides or
television programming.
"From Mr. Eisner's standpoint, he had to listen
to what investors wanted now and I think he did," Kim said.
Gold's resignation comes as Disney's board
begins two days of meetings in New York.
The board is scheduled to discuss the report of
its governance and nominating committee, which recommended that
Roy Disney and two other directors not be renominated because they
exceed the company's mandatory retirement age of 72.
Gold, 60, played a key role along with Roy
Disney in 1984 to save the company from a takeover and to install
Eisner as chairman. He heads Shamrock Holdings, which manages Roy
Disney's investments.
But Gold's role has been diminished over the
past two years as he has become more of a critic of Eisner. Last
year, the board adopted new corporate governance guidelines that
removed Gold's status as an independent investor and cut his
influence.
Board member George Mitchell, the former U.S.
senator from Maine, said in a statement Sunday that the governance
and nominating committee recently informed Roy Disney that the
age-limit rule instituted last year should apply.
"It
is unfortunate that the committee's judgment to apply these
unanimously adopted governance rules has become an occasion to
raise again criticisms of the direction of the company, and calls
for change of management, that have been previously rejected by
the board," Mitchell wrote.
Financial analysts said before news of Gold's
resignation that Roy Disney's comments would probably not have a
long-term effect on the company because they come at a time when
its fortunes are on the rise.
"This is unpleasant for everybody," said Harold
Vogel of Vogel Capital Management in New York. "But as long as the
company's stock price stays up, as long as the trends are on the
mend, there's no reason to believe there would be anything
different."
Most analysts surveyed by Thomson First Call
expect Disney to increase its earnings in 2004 by 30 percent to 86
cents per share and by another 18 percent to $1.02 per share in
2005. The company's theme parks have seen slight improvements as
tourism increases and its troubled ABC Television network has seen
some rise in ratings and advertising revenue.
Shares of Disney were up 5 cents to $23.14 in
late afternoon trading Monday on the New York Stock Exchange.
Roy Disney is the last family member active in
the company, founded in the 1920s by his uncle Walt and his
father, Roy O. Disney.
In January, the board announced three other
resignations in an attempt to shrink the board to a more
manageable size.
One of those directors was another Eisner
critic, Andrea Van de Kamp.
While the board's actions since January
eliminate four directors known to be Eisner allies and add several
new independent members, they also effectively rid the board of
all known opposition to Eisner and his management team.
NOTE:
The Walt Disney Company is the parent company of KABC-TV.
"It
is unfortunate that the committee's judgment to apply these
unanimously adopted governance rules has become an occasion to
raise again criticisms of the direction of the company, and calls
for change of management, that have been previously rejected by
the board," Mitchell wrote. 