Iger to Succeed Eisner as Disney CEO
LOS ANGELES (Reuters) – On Sunday the Walt Disney Company ended its contentious search for a new leader without leaving the house that Mickey Mouse built, naming current company president Robert Iger to succeed chief executive Michael Eisner, who will step down a year before he planned.
The company also said that Eisner — once the highest paid chief executive in the United States — will end his more than 20-year reign on Sept. 30, and turn over control of the vast entertainment conglomerate to his preferred successor, a former TV weatherman who worked his way to the top of Disney.
However, two former directors who led a 2004 shareholder protest, including namesake Walt Disney’s nephew Roy, were furious with the board’s choice, saying investors had been “conned.” They also accused the board of failing to find major outside candidates.
Eisner began his reign in glory, revitalizing a company whose business had turned flat. But he now leaves against a backdrop of embarrassing lawsuits from former Disney executives and a bitter shareholder protest that saw a 45 percent vote against him at the 2004 annual meeting.
The 63-year-old Eisner will remain on the Disney board until the company’s 2006 annual meeting.
Disney Chairman and former U.S. Senator George Mitchell said: “We definitely had choices — we made the right choice.”
On a conference call, Mitchell told reporters that Iger deserved partial credit for the company’s recent stock market gains and financial improvement after Disney hit a rut in the late 1990s.
Mitchell also said the process was thorough and the vote for Iger was unanimous despite “vigorous discussion” by directors.
LOYAL SUCCESSOR
Iger, 54, is a longtime media executive who began his career as a weatherman before starting a steady advance at television network ABC and then Disney.
The dapper Iger is credited with helping turn around ABC and managing much of Disney’s day-to-day operations, as well as a new focus on technology and expansion into Asia, where Disney is building one theme park and considering others.
But he has also been Eisner’s loyal lieutenant and hand-picked successor, and dissident shareholders Roy Disney and Stanley Gold have said Eisner influenced the process heavily — a contention the board has denied.
Iger had been the frontrunner, but the timing of the announcement came sooner than expected since the board had set a June 2005 target date to find a new chief. Eisner himself had said he would step down as CEO in September 2006.
Charles Elson, director of the Center for Corporate Governance at the University of Delaware, said the board decision was not as transparent as he would have preferred and would not silence critics.
“Having gone within the company to someone closely associated with the current CEO, and that the current CEO will be there a bit longer, will only fuel dissent,” he said, referring to Eisner’s presence on the board for another year.
Eisner said on Sunday he would not seek to be renominated to the board after the 2006 annual meeting or seek the job of chairman and Mitchell said he would take Eisner at his word.
Disney shares fell between 1998 and 2002, but soared 43 percent in 2003 and another 19 percent in 2004. The shares are off about 1 percent so far this year.
DISSENT SIMMERS
Investors have no direct means to change management since that is the job of the board. Dissident shareholders could try to change the board, although not for another year, and analysts say the process would be long and expensive.
A spokesman for Gold and Disney declined to elaborate on their statement, which said, “(Disney) shareholders should seriously consider replacing this board and starting anew.”
But among other things, analysts say Iger had the potential to mend fences with Pixar Animation Studios Inc., the maker of “Toy Story” and “The Incredibles,” which is ending its profitable partnership with Disney.
“This was not a broken situation,” said Larry Haverty, a portfolio manager at Gabelli & Co., who has supported management for the last year or so. “I think that the board did the right thing.”
Iger has been president and chief operating officer of the company since January 2000. His career at ABC started in 1974 in New York as a studio supervisor. In 1996, he joined Disney after the company acquired Capital Cities/ABC.
Rivals for the Disney job apparently included Meg Whitman, eBay Inc.’s chief executive, who bowed out of the race, according to media reports.
Others considered as potential candidates included Peter Chernin, the chief operating officer of News Corp.; Viacom Inc. co-presidents Tom Freston and Leslie Moonves, and Yahoo Inc. Chief Executive Terry Semel.
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