Post by hoya01 on May 10, 2005 8:40:06 GMT -5
I don't who in their right mind wants to sit on a corporate board anymore...
Suit Is Filed Over Disney CEO Search --- Ex-Directors Claim Board Misled Investors on Range Of Potential Candidates
By Merissa Marr
Reviving their campaign against Walt Disney Co.'s leadership, dissident ex-directors Roy E. Disney and Stanley Gold filed a lawsuit against the company and certain directors over the Disney board's search for a new chief executive.
After resigning from Disney's board in 2003 in protest at the company's leadership and performance, Messrs. Disney and Gold spearheaded a shareholder revolt last year against longtime chief Michael Eisner. Mr. Eisner subsequently gave up his chairmanship and later said he would retire as CEO. But the former directors have complained the search for Mr. Eisner's replacement was a "sham" after his hand-picked successor, Robert Iger, was named as the next CEO.
In the lawsuit, filed in Delaware Chancery Court, Messrs. Disney and Gold are suing the company to void the last board election, claiming that the board misled investors during the search in an effort to ensure the re-election of the incumbent board. Defendants in the suit are Disney itself; Mr. Eisner, Mr. Iger and Chairman George Mitchell; and five other board members -- Judith Estrin, John Chen, Aylwin Lewis, Monica Lozano and Leo O'Donovan. They are accused of fraud and breach of the duty of disclosure.
The Disney board members not named as defendants in the claim are Gary Wilson, Robert Matschullat, John Bryson and Fred Langhammer. A spokesman for the dissidents said that "based on the information available at this time, Messrs. Disney and Gold believe that the individuals named in the lawsuit are the appropriate members of the Disney board to be named in this action."
The division hints at a perceived split on the board during the selection process, when some insiders say that directors such as Messrs. Wilson and Matschullat pushed harder for consideration of outside candidates.
In a brief statement, Disney said, "The record of strong performance of The Walt Disney Company speaks for itself, and this frivolous and baseless lawsuit reflects the mean-spirited, self-serving interest of two ex-board members." In fighting off the dissidents in recent months, Disney has pointed to the company's much-improved financial performance.
After Mr. Eisner announced his retirement plans last September, Disney said it had a strong internal candidate in Mr. Iger but also would consider external candidates in its search for a new CEO. Throughout the process, the company insisted that it was carrying out the search with "open minds" and with "no prior determination."
But the former directors claim Disney never seriously considered anyone but Mr. Iger, and used "substantial company resources during the search process to mount an aggressive public relations campaign to promote Iger for the job." They added that external candidates were being warded off because they believed Mr. Iger was a shoo-in.
They claim that Disney only interviewed one external candidate: eBay Inc. Chief Executive Meg Whitman. According to people familiar with the situation, Ms. Whitman withdrew her candidacy in March because she felt the board was dragging its feet and appeared set on Mr. Iger. Shortly afterwards, Mr. Iger was named as the new CEO.
Mr. Mitchell, who led the search, argued that the process had been thorough and fair. The lawsuit said that if Messrs. Disney and Gold and their Shamrock investment company had "known the actual facts, they would have run an alternate slate of directors at the 2005 annual stockholders meeting."
The suit raises the possibility of Disney being dragged into a high-profile trial, just as it emerges from another Delaware suit brought by investors, involving former Disney president Michael Ovitz. That suit, which is expected to receive a ruling soon, took many years to reach trial. However, lawyers for Messrs. Disney and Gold have filed for an expedited discovery that would bring their case to trial in August.
Messrs. Disney and Gold say Disney turned down their request for records documenting Disney's search -- information that could come to light if their case moves forward to the discovery stage.
Suit Is Filed Over Disney CEO Search --- Ex-Directors Claim Board Misled Investors on Range Of Potential Candidates
By Merissa Marr
Reviving their campaign against Walt Disney Co.'s leadership, dissident ex-directors Roy E. Disney and Stanley Gold filed a lawsuit against the company and certain directors over the Disney board's search for a new chief executive.
After resigning from Disney's board in 2003 in protest at the company's leadership and performance, Messrs. Disney and Gold spearheaded a shareholder revolt last year against longtime chief Michael Eisner. Mr. Eisner subsequently gave up his chairmanship and later said he would retire as CEO. But the former directors have complained the search for Mr. Eisner's replacement was a "sham" after his hand-picked successor, Robert Iger, was named as the next CEO.
In the lawsuit, filed in Delaware Chancery Court, Messrs. Disney and Gold are suing the company to void the last board election, claiming that the board misled investors during the search in an effort to ensure the re-election of the incumbent board. Defendants in the suit are Disney itself; Mr. Eisner, Mr. Iger and Chairman George Mitchell; and five other board members -- Judith Estrin, John Chen, Aylwin Lewis, Monica Lozano and Leo O'Donovan. They are accused of fraud and breach of the duty of disclosure.
The Disney board members not named as defendants in the claim are Gary Wilson, Robert Matschullat, John Bryson and Fred Langhammer. A spokesman for the dissidents said that "based on the information available at this time, Messrs. Disney and Gold believe that the individuals named in the lawsuit are the appropriate members of the Disney board to be named in this action."
The division hints at a perceived split on the board during the selection process, when some insiders say that directors such as Messrs. Wilson and Matschullat pushed harder for consideration of outside candidates.
In a brief statement, Disney said, "The record of strong performance of The Walt Disney Company speaks for itself, and this frivolous and baseless lawsuit reflects the mean-spirited, self-serving interest of two ex-board members." In fighting off the dissidents in recent months, Disney has pointed to the company's much-improved financial performance.
After Mr. Eisner announced his retirement plans last September, Disney said it had a strong internal candidate in Mr. Iger but also would consider external candidates in its search for a new CEO. Throughout the process, the company insisted that it was carrying out the search with "open minds" and with "no prior determination."
But the former directors claim Disney never seriously considered anyone but Mr. Iger, and used "substantial company resources during the search process to mount an aggressive public relations campaign to promote Iger for the job." They added that external candidates were being warded off because they believed Mr. Iger was a shoo-in.
They claim that Disney only interviewed one external candidate: eBay Inc. Chief Executive Meg Whitman. According to people familiar with the situation, Ms. Whitman withdrew her candidacy in March because she felt the board was dragging its feet and appeared set on Mr. Iger. Shortly afterwards, Mr. Iger was named as the new CEO.
Mr. Mitchell, who led the search, argued that the process had been thorough and fair. The lawsuit said that if Messrs. Disney and Gold and their Shamrock investment company had "known the actual facts, they would have run an alternate slate of directors at the 2005 annual stockholders meeting."
The suit raises the possibility of Disney being dragged into a high-profile trial, just as it emerges from another Delaware suit brought by investors, involving former Disney president Michael Ovitz. That suit, which is expected to receive a ruling soon, took many years to reach trial. However, lawyers for Messrs. Disney and Gold have filed for an expedited discovery that would bring their case to trial in August.
Messrs. Disney and Gold say Disney turned down their request for records documenting Disney's search -- information that could come to light if their case moves forward to the discovery stage.