Ex-Directors of Disney Sue Over Selection of Next Chief - New York Times - 5/10/05
Roy E. Disney and Stanley P. Gold are back.
The two former directors of the Walt Disney Company never much liked Robert A. Iger, Michael D. Eisner's choice as his successor, and now they are going after the company and members of the board of directors for choosing Mr. Iger as the next chief executive.
Several weeks after the February meeting, the board announced that Mr. Eisner would be succeeded this fall by Mr. Iger, Disney's president. "In short, the defendants did not have 'open minds,' and Iger was their choice," the complaint said.
Suit Asks Court to:
Void 2005 Election of Directors
Compel Company to Hold Another Election for Directors After Full Disclosure About CEO Selection Process
Enjoin Company and Board from Changing Eisner's or Iger's Compensation or Contracts
According to the complaint, despite the Board's public promises to Company shareholders that it would conduct the CEO search with 'open minds' and with no predeterminations or preconditions, in reality, the Board's CEO selection process precluded serious and effective consideration of external candidates. The complaint cites, among other things:
reports that the Board interviewed only one external candidate, delayed notifying her of any decision and did little to dissuade her from withdrawing her candidacy;
Michael Eisner's presence or expected presence at interviews of external candidates; and
the Board's failure to investigate Iger's role in the Fox Family Channel acquisition, the presentation of overly optimistic projects about Fox Family to the Board and the related withholding from the Board of the CFO's plan to save the Company $400 million by writing down the value of those Fox Family assets.