Stanley Gold Ankles Disney Board of Directors and Calls for Eisner’s Remova
As this Board knows, during my tenure I have tried to be an active, engaged Director. I believe a board should not merely rubber stamp decisions of senior management. I decided in August of 2002 that it was not enough just to express my views in the limited time set aside for our infrequent Board meetings. I therefore began a series of written communications to the Board regarding the Company, its management and the Board. I wrote to express my disagreement and growing concern with management, its policies and the effectiveness of the Board. I focused on the failed initiatives of the Company over the past five or six years and admonished the Board for not actively engaging in serious discussions regarding the Company's flawed plans and management's unmet projections and unfulfilled promises. In particular, I have urged the Board to concentrate on the Company's "poor performance, lack of credibility and accountability and poor capital allocation." In an effort to get Directors to seriously assess management's 5-year strategic plan (a plan that is only discussed with this Board, but not submitted for Board approval), I wrote to the Board to detail the Company's unsatisfactory financial performance for the past several years and to suggest a process, a so-called Diagnostic Review, designed to give the non-management directors the tools necessary to evaluate performance and establish a comprehensive framework and baseline from which the Board could be active partners in developing plans to maximize the value of Disney's existing assets and businesses. That approach was opposed by management and then, not surprisingly, rejected by the Board. The Board and its Chairman even criticized me for putting on paper these serious questions about fundamental matters.
I believe the Board's adoption of its Corporate Governance Guidelines was yet another example of this Board's commitment to image over substance. Among other things, those Guidelines were carefully crafted to stifle dissent while allowing those supportive of senior management to continue business as usual. This was apparent when the Board applied its Guidelines to conclude that I was not "independent" despite the fact that I frequently challenged management at Board meetings and criticized both the Board's and the Company's performance. That decision was initially based on my daughter's employment in a non- executive position at Disney and, then, after that reason became insufficient under the new NYSE Governance Guidelines, because of my association with Roy. This resulted in my further isolation as I was no longer permitted to serve on the Governance and Nominating Committee or the Compensation Committee. On the other hand, John Bryson was deemed "independent" and appointed Chairman of the Nominating and Governance Committee despite the fact that his wife is an executive officer at Lifetime Entertainment Television, a 50% owned subsidiary of Disney, where she earned in excess of $1 million in total compensation in fiscal 2001. In addition, Senator Mitchell was appointed Presiding Director, despite having been recently employed as a Company consultant and notwithstanding that the law firm of which he was chairman received in excess of $1 million for legal services on behalf of the Company in fiscal 2001.
At the time the Company's new Corporate Governance Guidelines were being considered, I also urged the Board to separate the positions of Chairman of the Board and CEO. This separation would empower the Board and help establish its independence and oversight role. Not only did the Board reject that initiative, the Board failed to give the newly established Presiding Director any real substantive powers.
Continuing through March of this year I wrote to express my concerns regarding the financial performance of the Company and the repeated failures of management to achieve its forecasts. I urged this Board to feel a sense of urgency in dealing with the issues of leadership, performance, operations and accountability. Those efforts failed. Instead, Mr. Eisner was awarded a bonus of $5 million in Disney shares by the Compensation Committee despite objections by Roy and me. I believe that bonuses for senior management must be tied to performance; by that measure, no bonus was warranted.