You may have read it elsewhere but Michael Eisner got a whopping 43% withholding vote. FORTY-THREE! This number is unprecedented for a board executive of a major company. Steve Case got a 22% no-confidence vote last year and a director on Lockheed Martin got about a third against him the year prior.
So Eisner was UNANIMOUSLY stripped of his title as chairman. Hold the applause... he is still CEO. And he is still a board member. Almost as bad as those two things, he was replaced by ex-Senator George Mitchell, who is a major Eisner ally. Of course the board was immediately criticized for who they named since Mitchell was also targeted with 24%. But then all board members got high no-confidence votes.
Behind the scenes, though, some boardmembers were not happy with the pick, which they knew would be controversial. And their public comments will surely keep them in the news: "While making this change in governance, the board remains unanimous in its support of the company's management team and of Michael Eisner, who will continue to serve as chief executive officer." Yeah, siding with the guy half your shareholders hate will really endear you to them. If the stock drops again, we'll see how long the Eisner luuuuv lasts.
Speaking of people who have no clue, someone needs to post a thread on Eisner's appearance on Nightline. Eisner said he didn't consider the vote as a referendum on his management or company performance. He claims to believe the vote was strictly to separate the CEO and chairman positions. Sure it was, you delusional missing link! (Seriously, look at the man and then try to tell me evolution is fiction!)
Anyhow, the stock market should tell the story. Normally, removing a CEO from the chairmanship might induce investors to buy. But considering 43% of the investors might feel like their voices aren't being heard, major sell-offs wouldn't be out of the question. This could really hurt Disney. Had the board named one of the independent boardmembers, instead of Eisner's favorite polyp, they might have actually delayed any major decisions. After all, they can't just fire Eisner without a replacement in mind and without a little warning for shareholders. We'll see...
NOT A WORD, YOU SNIVELING LITTLE BOARD CRONIE.
As the Orlando Sentinel reported, Mr. Ei$ner got a "public spanking." After the vote the board takes the chairmanship away -- a cosmetic action at best that was OBVIOUSLY concocted before the vote to placate discontent shareholders.
To quote TPI regular Jason Moore: "Splitting the positions was meaningless. nothing really changes. Ei$ner is still there, the board is still in his pocket, and moving a man (Mitchell) up to the role of Chairman seems to go against the reason for making a change considering he had had a 24-25% vote against him as well."
While we can all play armchair CEO and make predictions about when Mr. Ei$ner will eventually leave his post, we might do well to consider what Stanley Gold and Roy Disney ("You can't fire me! I quit!") might do in response to Mr. Ei$ner's continued tenure as CEO. According to the Orlando Sentinel: "Though they declined to discuss specifics, they said they might consider suing the company" -- for what and how long that would take is anyone's guess -- "or offering up an alternative slate of directors at next year's annual shareholders meeting."
Next year?
Is that an admission that they believe Mr. Ei$ner will still be around in 2005?
Stay tuned...
From Reuters (about an hour ago):
"After Wednesday's vote, Comcast (NasdaqNM:CMCSA - News) urged Disney's independent shareholders to discuss the offer to combine the largest U.S. cable company with the home of beloved children's characters, multiple television networks, film studios and renowned theme parks, but some analysts think the proposal is virtually dead.
"Comcast has shown and made statements recently that it is unlikely to significantly raise its bid, and without significantly raising its bid, this deal's unlikely to get done," said Mark May, an analyst at Kaufman Bros., who revised his rating on Comcast to "buy" from "hold" on Thursday. UBS analyst Aryeh Bourkoff speculated that if Comcast is not invited into talks with Disney over the next few weeks, it would walk away without sweetening its bid. A source close to Comcast said on Wednesday night that the company has no intention of raising its bid."
What does this mean? Unless Disney shares drop below $23, shareholders will LOSE MONEY if they were to side with Comcast.
Further, if Comcast waits and the stock price drops and they make another bid, they will have to hope that their next move does not cause Disney's stock price to go up again.
Quoting David Mantell an analyst who follows Comcast for Loop Capital in Chicago, Comcast will likely have to pay a per share price that is "north of $31."
As I figured, the stock is skyrocketing... fifteen cents!!! Not too high for dumping an unliked chairman. But wait to see if any investors start dumping stock...
You also said, "Ei$ner is a goner."
And yet, Roy Disney ("You can't fire me! I quit!") and Stanley Gold have acceptted the fact that they may have to battle him again at the 2005 share holders conference.
Hmmm...
The competition for board slots then will make the first round of the NCAA hoops tournament look like lawn bowling.
I know what the point of my original post was, but it didn't seem to go with the rest of what you were saying. Or maybe I'm just missing something due to my morning tiredness and too many days in a row of reiterating the same points on every message board.
Heck, Stanley Gold even preempted the move with his statement at the shareholder's conference, noting (before the move was announced) that "It is no longer sufficient to separate the role of Chairman and CEO. That is not what this campaign has been about."
Today's Orlando Sentinel, reports that Mr. Disney and Mr. Gold have an option available to them beyond filing an undefined law suit or waiting until the 2005 shareholders' conference.
According to the Sentinel, Mr. Disney and Mr. Gold could launch a "consent solicitation" -- a process that allows shareholders of public companies to vote on important matters between regular corporate elections.
Basically, Disney shareholders could remove Mr. Eisner, change corporate by-laws or even sell the company. All they need is the consent of a majority of outstanding shares to vote in favor of the proposal. In the case of Disney, that would require votes from the 2.8 million shareholders who control the outstanding shares.
There are two challenges that come with this approach. First, the cost. The saveROYdisney.com group will have to finance the effort which would total between $3 million and $5 million. They would have to pay an independent firm to print ballots, mail them and then count the final tally. Then they would have to get a majority of outstanding shares -- not just a majority of those who would vote, but a majority of ALL outstanding shares.
Then they have to beat the clock. From the time the effort is launched, they would have 60 days to acquire said majority.
Considering Messers Disney and Gold's combined net worth is measured in hundres of millions of dollars (neither of them have ever "had a bad year.") financing this effort would be financially feasible. In addition since, as they contend, Mr. Ei$ner stands as the Disney equivalent of Darth Vader, they must have every reason to believe they can acquire the support of the shareholders.
Or are their convictions only limited to the creation of a splashy web sites and media rhetoric?
I guess we will see if these multi-millionaires are willing to invest a substantial portion of their own money into their efforts, or if their campaign is limited to lip-service.
At this point, Gold and Disney either need to take the slow boat to 2005 (and risk a Disney turnaround, an Eisner rally, and the embarassment of being wrong) or drop the intrigue and get themselves a strong CEO-candidate who, when made public, will energize this campaign.
Will anything like that happen? I doubt it, but I also doubt that (despite their protests) they do not have a guy on the hook to take Eisner's still-warm seat if the opportunity arises. History suggests differently.
From this morning's Orlando Sentinel:
"Comcast Corp downplayed its interest Monday in taking over the Walt Disney Co., saying the entertainment giant was not a must-have."
"If it happens, great," Comcast Chief Executive Brian Roberts told investors and analysts at a conference in Palm Beach. "If it doesn't, life goes on."
Not much passion in that kind of leadership, is there?
This next quote should make Disney CMs breath a sigh of relief.
"AT&T Broadband was a must-have event for our company."
That "must-have" forray resulted in 7,000 AT&T employees being shown the door in layoffs.
Reviewing the oft mentioned scenario wherein Mr. Ei$ner maintains his position through his current contract.
1. Survive the no-confidence vote at the shareholder's conference in Philadelphia (Check!)
2. Fight off Comcast takeover bid (Check!)
3. Name a successor.
4. Deliver two more quarters of profit.
5. Outline a strategy for the company's future.
Two items down! Three to go!
From the Dow Jones News: "Peter Chernin, president and chief operating officer of News Corp. , said Tuesday he expects to renew his contract at the global media company. Speculation has been rampant in recent weeks that Chernin might leave News Corp. to take over the top job at Walt Disney Co. if embattled Chief Executive Michael Eisner is forced to step down. Chernin, whose current contract expires this year, has been negotiating with News Corp. Chief Executive Rupert Murdoch to sign a new deal. "I wouldn't be in negotiations if I didn't want to stay at the company," Chernin told investors and analysts at a Bear Stearns conference. "I love the job. I'm happy."
So...any other alternatives to Ei$ner?
Perhaps Comcast's announcement that they don't consider Disney a "must have" is in response to the extensive article that appeared in the Wall Street Journal last Friday. This was the report that said Comcast lied to its shareholders when it claimed they had made in-roads with the board and that George Mitchell was receptive to their overtures. Former Senator Mitchell -- and the board -- responded that it was not true and where resentful of the fact that Comcast announced its bid during the analysts weekend in Orlando -- a move the Journal called "clumsy."
