Years from now, business schools will still be arguing if Roy and Stanley did the right thing leaving Disney’s boardroom this time to air their grievances. Stanley says they had no choice since Eisner had made sure to zip up all the directors’ mouths. Nevertheless, we may learn some very, very interesting things if Stanley successfully pressures Disney to release the lot of letters, memos, and the like from himself and Roy over the years. There’s something else: November 30 was the cutoff date for depositions to be taken in that Delaware-based shareholder lawsuit against Disney, Eisner, Ovitz and the various members of the board of directors over that ridiculously oversized severance payout to the onetime most powerful man in Hollywood. Sources close to the case say it’s possible that the shareholder lawyers may ask to re-depose Roy and Stanley to see if the two insiders who are now outsiders have anything to add.
On the other hand, don’t for a moment think, as the news stories contend, that Roy’s and Stanley’s pledges to continue opposing Eisner are a mere distraction for him. Otherwise, why would Eisner be on the phone at 8 a.m. New York time with Harvey Weinstein “ripping him a new one” — in the words of one insider — because the Miramax chief had dared to criticize the boss in a New York Times article about the Roy and Stanley resignations. And why would Eisner be furiously phoning Wall Street when Disney’s stock price fell 2.6% Tuesday from the fallout of the high-profile board furor.
Years from now business schools may also be arguing whether Eisner should have been so intent on filling his board with yes men that he helped usher Roy out by maneuvering to have his name left off the slate of directors that were to be elected in the coming year. Given all this, it’s hard not to recall those famous words from LBJ, who, when asked why he chose to reappoint J. Edgar Hoover as FBI director, said, “It’s probably better to have him inside the tent pissing out, than outside the tent pissing in.”
For instance, Stanley in a parting gesture managed a near knockout blow when he told the Los Angeles Times (which did not print the revelation, claiming they couldn’t confirm it as true, and had to let the Drudge Report do it for them) that Eisner had scorned Roy, Stanley, and Pixar’s Steve Jobs as “Shiite Muslims.” A Disney spokesperson denies this. If it did happen, it was a poor choice of words, especially considering that Eisner’s relationship with Jobs is so rotten that Disney No. 2 Bob Iger has been playing point man in the long-lagging but all-important Pixar negotiations.
Though the myriad personal animosities are intriguing, what’s really wrong with Disney is its Mickey Mouse corporate board. We all buy into this paradisiacal idea of an independent board of directors when in Disney’s case, it’s a myth. Institutional Shareholder Services, a nationally known proxy adviser, constantly urges companies to have at least one director with a large financial stake in the company and one willing to be a shareholder activist. Roy Disney fits both bills, but Eisner was “aging” him off.
Talk to any corporate heavyweight and the first thing you’ll hear is how very hard it is to eject a sitting chairman and CEO unless you are right there in the boardroom. For one thing, proxy fights are outrageously expensive. Even if Roy and Stanley come up with a rival slate of directors to challenge the Disney board, the earliest shareholders could vote on it would be winter 2005. Reminder: When Walter Hewlett, a musician and academician, led other family members to publicly fight HP’s $20 billion acquisition of Compaq last year, he too claimed the support of employees, investors and others with a stake in HP’s leadership. He even received public hosannas from advocates for shareholder rights as well as large institutional investors. And still he lost.
Right now there’s a whole lot of pissing going on in this contest, only time will tell if Roy Disney and Stanley Gold are aiming into the wind.