Letter From Stanley P. Gold to the Board of Directors of the Walt Disney Company

Dec 01, 2003, 00:00 ET from Stanley P. Gold

    BURBANK, Calif., Dec. 1 /PRNewswire/ -- Stanley P. Gold today sent the
 following letter to the Board of Directors of the Walt Disney Company:
                                              December 1, 2003
     To the Board of Directors of the Walt Disney Company:
     It is with regret that I resign effective immediately from the Board of
 Directors of the Walt Disney Company and second Roy Disney's call for the
 removal of Michael Eisner as Chairman and C.E.O.  I am proud of my more than
 15 years of service and my role in reshaping the Company in 1984 by bringing
 Frank Wells and Michael Eisner to the Company.  I do, however, lament that my
 efforts over the past three years to implement needed changes has only
 succeeded in creating an insular Board of Directors serving as a bulwark to
 shield management from criticism and accountability.  At this time, I believe
 there is little that I can achieve by working from within to refocus the
 Company.  I hope that my resignation will serve as a catalyst for change at
     The most recent evidence of the drive for insularity is reflected in the
 Governance Committee's determination that Roy Disney should no longer serve on
 the Board, ostensibly because Roy had surpassed the expected retirement age
 established by the Board's Corporate Governance Guidelines.  In fact, these
 very rules regarding age, by their terms, only apply to non-management
 directors, not to Roy, who, as the Committee knows, has been deemed a
 management director.  The Committee's decision and George Mitchell's defense
 of it yesterday are clearly disingenuous.  The real reason for the Committee's
 action is that Roy has become more pointed and vocal in his criticism of
 Michael Eisner and this Board.  This is yet another attempt by this Board to
 squelch dissent by hiding behind the veil of "good governance."  What a
 curious result.
     Roy has devoted a lifetime to Disney as both an employee and Director.  He
 has served with renewed vigor during these times of malaise, disappointment
 and instability at the Company, trying to maintain the morale of employees,
 focusing on the magic that makes Disney special and attacking bonuses to the
 CEO and increased compensation for Board members while the Company falters and
 shareholder value erodes.  He and his family have a very large financial stake
 in the Company.  Unlike Messrs. Watson and Murphy who have asked to be
 replaced, Roy has sought even more involvement only to be told that his input
 in animation will continue to be minimized and that his role as a Director is
 no longer welcome.  This Board has become an enabler to entrenched management
 and, in so doing, is not effectively discharging its duties to the
 shareholders.  This conduct has resulted in yet another valuable human asset
 of the Company slipping away.  Within the last year this Board will have
 managed to cull from its ranks Andrea Van de Kamp and now Roy, two of the
 staunchest critics of Michael Eisner and the Company's poor performance.  I
 cannot sit idly by as this Board continues to ignore and disenfranchise those
 who raise questions about the performance of management.
     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
     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.
     In a similar vein, I recently wrote to express my objection to the
 Compensation and Governance Committee's joint recommendation that fees paid to
 Disney Directors be increased dramatically, that stock grants to Directors be
 substituted for options (and thereby render meaningless the requirement that
 Directors own $100,000 in Disney shares) and that greater compensation be paid
 to the Presiding Director.  Raises for the Disney Directors at this time are
 inappropriate based on my assessment of the Company's performance.  I objected
 to the increase for the Presiding Director on the grounds that it did not
 reflect a reasonable payment for the only slightly increased duties.  Finally,
 I could not make sense of a share ownership requirement for Directors that
 would be satisfied by a direct issuance from the Company at the same time
 Directors' cash compensation was being increased.
     It is clear to me that this Board is unwilling to tackle the difficult
 issues I believe this Company continues to face -- management failures and
 accountability for those failures, operational deficiencies, imprudent capital
 allocations, the cannibalization of certain Company icons for short-term gain,
 the enormous loss of creative talent over the last years, the absence of
 succession planning and the lack of strategic focus.  Instead, the Board seems
 determined to devote its time and energies to adopting policies that focus not
 on substance, but on process and, in reality, only serve to muzzle and isolate
 those Directors who recognize that their role is to be active participants in
 shaping the Company and planning for executive succession.  Further, this
 Board isolates those Directors who believe that Michael Eisner (when measured
 by the dismal results over the last 7 years) is not up to the challenge.
 Perhaps acting independently, from outside the Boardroom, not hamstrung by a
 recently enacted Board policy barring Board members from communicating with
 shareholders and the media, I can have greater success in shaping the
 policies, practices and operations of Disney than I had as a member of the
     In accordance with Item 6 of Form 8-K and Item 7 of Schedule 14A,  I
 request that you disclose this letter and that you file a copy of this letter
 as an exhibit to a Company Form 8-K.
                                              Very truly yours,
                                              Stanley P. Gold

SOURCE Stanley P. Gold