Roy Disney and Stan Gold: Why They Left Disney and What They Want From The Board

savedisney.com ^ | Jan., 04 | Michael McConnell

[churchillbuff]

Roy and Stan: Why They Left The Walt Disney Company and What They Want From The Board of Directors By Michael McConnell, Shamrock Holdings Managing Director

Roy E. Disney and Stanley Gold have certainly caught the attention of Walt Disney Company management since resigning just 40 days ago.

CEO Michael Eisner, President Bob Iger, CFO Tom Staggs and their team have been campaigning with major investors and Wall Street analysts, while simultaneously making appearances at industry conferences around the country. Naturally, their message has been positive.

The executives claim that strong First Quarter 2004 earnings will mark The Company's turnaround. We are to believe that some sort of "momentum" will lead to a resumption of long-term annual earnings growth. We have also been told that the Board of Directors now adheres to best corporate governance practices.

While the current earnings, in isolation, are encouraging... please forgive our skepticism. We have heard this story many times before.

It is our intention to challenge this latest PR campaign. Too much time has been spent running from analyst to reporter, defending long-term failures by pointing to short-term upticks. We are concerned that the Company is being run for today, not tomorrow, by people more interested in preserving their own status quo than in nourishing the creative legacy of one of America's great companies.

Here, we hope to inspire an open dialogue that does not deny the Company's historical poor performance and failed strategies. In future weeks, we will take issue on a wide range of important strategy and performance matters, including:

Financial performance has deteriorated significantly since the mid 1990's and this has resulted in the destruction of long-term shareholder value; The success of first quarter 2004 earnings is not indicative of a turnaround, nor is it sustainable; Management has consistently failed to meet its business plans and, most alarmingly, the Board has been unwilling to hold them accountable; Michael Eisner and his management team, led by CFO Tom Staggs and Strategic Planning Chief Peter Murphy, have been given many years to develop a successful business strategy. However, the plans that have been implemented have been both a financial and creative failure – with the $5.2 billion Fox Family acquisition the most recent disaster; The Disney tradition of quality, creativity and family-friendliness is time honored and tested ... and is entirely consistent with long-term financial success. When Disney does what it has always done best – create premium content – the Company prospers; Creating world class content is all about the "talent." Michael Eisner appears to have lost his ability to inspire, lead and develop relationships with the best of the best. Aggressive micromanagement has lead to a talent exodus companywide; Substantive governance by a Board requires appropriate succession and compensation processes and plans, effective strategic oversight and a constructive tension between management and the Board. We believe Michael Eisner's autocratic management of the Company, unchecked by the Board of Directors, has resulted in a gross misallocation of the Company's capital, an exodus of both creative and managerial talent with no identified internal successor, an inadequate linkage between pay and performance and the creation of a Presiding Director position (George Mitchell) with little real power. While others may seek to portray this as a personal dispute, let us assure you this is simply not the case. Our disagreement with the Board and management concerns only the long-term growth and performance of The Walt Disney Company.

Our goals are simple:

We want the Company to prosper creatively and thereby, financially, for generations to come.

We want the Company to realize its potential for all constituents; including shareholders, cast members, customers, partners, and the families it interacts with every day.

We believe a better management team can be quickly assembled to meet these challenges. (And for the record, neither Roy nor Stan wants to become CEO, COO or CFO).

We do not claim to have all the answers, but are unafraid to ask the tough questions necessary to understand and meet the challenges ahead. In our experience, when the right questions are asked, the real issues are uncovered and appropriate actions can be taken.

But we can't do it alone. As the Board of Directors have failed to answer Roy and Stan's challenges over the last several years, now they will have to answer to you.

For your convenience, a list of Walt Disney Company Board members and selected e-mail links are posted here on our website's Contact Us page.

Check in regularly. When you read all of the facts, you will know what must be done. Together we can bring the magic back.

Mike

A Word About Shamrock Holdings

Shamrock Holdings is the private investment vehicle of the Roy E. Disney Family, founded 25 years ago by Roy and Stan.

Throughout its long history as a direct investor, Shamrock has produced solid financial returns—in excess of 20%—for its partners, while at the same time adhering to Roy's guiding principles of quality and integrity.

The Shamrock executive management team is committed, loyal and stable—average tenure of the top eight executives is over 18 years with exceptionally low turnover throughout the organization. Today this group oversees and manages approximately $1.5 billion of assets for the Disney Family and many outside investors.

[churchillbuff]

From "Savedisney.com":

F A M I L I E S Walt Disney once said, "The important thing is the family. If you can keep the family together—and that's the backbone of our whole business, catering to families—that's what we hope to do."

In this section, we re-connect the dots of The Walt Disney Company—its once unique relationship with families, the vital core of our global village, and its sense of place and responsibility within a landscape of ever-shifting morals, ethics and social change. Here, we seek to shed light on the often contradictory corporate standards and practices that currently threaten Disney's family-focused legacy. Walt dedicated his creative freedom to bringing parents and children, young and old, together, in the spirit of joy, harmony and fun. He always created from that space of fun and curiosity, but with a specific intent: to show each of us the very best in ourselves and to celebrate that inherent goodness. By inviting us to step outside the confines of "reality" into the limitless joy and possibility that can be experienced within the realms of fantasy and imagination, we can spend a few, precious hours nurturing not only our children, but the child within each of us who still sparks with innocence, awe and a twinkling hope. This is a language human beings can all share, whether we live in the United States of America or in China. It's little wonder that as early as 1935, Walt's alter-ego, Mickey Mouse was honored by The League of Nations for serving as a much-needed "symbol of universal good will."

Walt once said, "We're all proud of the honors that many groups around the world have given us. And we're even more proud that the public—whether in theaters, at Disneyland, or in their homes—continues to express its faith in the kind of family entertainment we produce."

May we together reclaim, restore, and preserve these endangered ideals, values and standards, by returning to the original Disney tradition of producing quality family entertainment, and in time, earn back the good will of our families, the world over.

[theFIRMbss]

>We believe a better management team can be quickly assembled to meet these challenges. (And for the record, neither Roy nor Stan wants to become CEO, COO or CFO).

I would bet this guy agrees that a new team could get together fast...

[nmh]

A good place to start is to FIRE all the homos that work at Disney. They offer nothing but crudeness and bathroom talk. Next get rid of Eisner.

[Cicero]

Well, good luck to them. I'd love to see Michael Eisner thrown out on his ear. Unfortunately he would still land with a very golden parachute and head off to make mischief somewhere else.

[unspun]

Interesting. Jobs doesn't exactly have a pro-family track record, does he? That wasn't exactly the theme in the office during the old Apple days.

[DWC]

I will not buy disney stock for my kids till they get rid of eisner.

[bonesmccoy]

I nominate these two guys!

[theFIRMbss]

>Interesting. Jobs doesn't exactly have a pro-family track record, does he?

Actions speak louder than words. Pixar under Jobs is the only big studio that's built on making G-rated films. That's not too shabby...

[longtermmemmory]

do you have anything of substance to the claim eisner is a homosexual?

I object to homosexual taking over father's day at disney. Elimination of the association with such anti-family groups would be number 1.