Seeming to bow from pressure from shareholder groups, The Walt Disney Co.’s board of directors said last week it would seek to name a replacement for outgoing CEO Michael Eisner by next June.
Eisner sent a letter to the board of directors on Sept. 9, stating he would resign after his contract ends on Sept. 30, 2006. Although the latest statement from the board supported Disney’s chairman for the rest of his tenure, it appears unlikely he would remain with the company after it names his successor.
Prudential Equity Inc. media analyst Katherine Styponias said in a report the Disney board might name a new CEO before the June date, mainly because several big negotiations — with animation studio Pixar Inc. and for National Football League TV rights — are expected to begin in the first half of 2005.
“We believe the recruiting process could move along more quickly than the board currently anticipates,” Styponias wrote.
The board said it would conduct a thorough search and would hire an executive search firm. The board also said it would seek a replacement for chairman George Mitchell, who reaches the mandatory retirement age of 72 in August, after it selects a CEO.
While the board said it would consider Eisner’s hand-picked replacement — Disney president and chief operating officer Robert Iger (who the board called an outstanding executive and highly qualified for the position) — “the process should include full consideration of external candidates as well.”
Several possible candidates have emerged, including former Disney executives like eBay Inc. CEO Meg Whitman and Gap Inc. president and CEO Paul Pressler.
Other media honchos on the short list include News Corp. president and chief operating officer Peter Chernin, former Viacom Inc. president and COO Mel Karmazin, Comcast Corp. COO Steve Burke and Jeff Bewkes, chairman of Time Warner Inc.’s entertainment and networks group.
Disney has been under intense pressure from several shareholder groups, including one headed by former company executive and board member Roy Disney.
Roy Disney, the nephew of company founder Walt Disney, has been a vocal opponent of Eisner’s and criticized the CEO’s resignation letter, claiming it left too many doors open for Eisner to retain power.
Specifically, Roy Disney was upset that Eisner’s apparent resignation did not prevent the CEO from becoming chairman of Disney — nor preclude him from remaining on the board of directors.
In a letter to the board Roy Disney said it would be “intolerable for Michael Eisner to continue to hold the company hostage for two more years.”
NO BOARD SEAT
On Sept. 10, the California Public Employees Retirement System, one of the largest holders of Disney shares, said Eisner’s “continued presence on the board would prevent the company from the clean break that is needed to restore investor confidence.”
Eisner seemed to address those fears last week, telling Fortune magazine he had no intention of remaining on Disney’s board after Sept. 30, 2006.
“I have not asked the board to stay on the board or be chairman after the end of my contract. My assumption is that I would not continue on the board or as chairman,” Eisner told Fortune.
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