U.S. Securities and Exchange Commission
Washington, D.C. 20549
NOTICE OF EXEMPT SOLICITATION
Submitted pursuant to Rule 14a-6(g)
1. Name of the Registrant:
The Walt Disney Company
2. Name of person relying on exemption:
Roy E. Disney, Patricia A. Disney, Roy P. Disney, Susan Disney Lord,
Abigail E. Disney, Timothy J. Disney, Shamrock Holdings, Inc., Shamrock
Holdings of California, Inc. and Stanley P. Gold
3. Address of person relying on exemption:
4444 Lakeside Drive, 2nd Floor, Burbank, California 91505
4. Written materials. Attach written materials required to be submitted
pursuant to Rule 14a-6(g)(1):
The attached material is the text of a speech given by Stanley Gold
to savedisney.com supporters in Philadelphia on March 2, 2004.
*****
The attached material is the text of a speech given by Michael McConnell
to savedisney.com supporters in Philadelphia on March 2, 2004.
*****
The attached material is the text of a speech given by Roy E. Disney
to savedisney.com supporters in Philadelphia on March 2, 2004.
*****
The attached material is the text of a speech given by Stanley Gold
to shareholders of The Walt Disney Company in Philadelphia on March 3, 2004.
*****
The attached material is the text of a speech given by Roy E. Disney
to shareholders of The Walt Disney Company in Philadelphia on March 3, 2004.
STANLEY GOLD - "SAVEDISNEY.COM" MEETING REMARKS
MARCH 2, 2004
GOOD AFTERNOON.
MY NAME IS STANLEY GOLD. ON BEHALF OF MY FRIEND - AND FELLOW FORMER
DIRECTOR OF THE WALT DISNEY COMPANY - ROY DISNEY, I'D LIKE TO WELCOME YOU
TO PHILADELPHIA AND THIS GATHERING OF CONCERNED DISNEY COMPANY
SHAREHOLDERS.
IT'S FITTING THAT WE'RE MEETING IN A CITY THEY CALL THE CRADLE OF
LIBERTY. AFTER ALL, WHAT WE'RE INVOLVED IN HERE IS A FIGHT FOR OUR RIGHTS -
A FIGHT AGAINST THE TYRANNY OF A DYSFUNCTIONAL MANAGEMENT AND AN
INEFFECTUAL BOARD.
AS YOU KNOW, ROY AND I ORGANIZED SAVEDISNEY.COM AFTER WE BOTH
RESIGNED FROM THE DISNEY BOARD THREE MONTHS AGO. AND I MUST SAY, AS PAINFUL
AS IT'S BEEN TO SPEAK OUT PUBLICLY AGAINST THE BOARD AND MANAGEMENT OF A
COMPANY WE TRULY LOVE, THE SUPPORT AND ENCOURAGEMENT WE'VE RECEIVED FROM
SHAREHOLDERS LIKE YOU HAS BEEN NOTHING SHORT OF AMAZING.
ALL I CAN SAY IS THANK YOU - THANK YOU FOR CARING ABOUT THE DISNEY
COMPANY AS MUCH AS WE DO - AND FOR TAKING THE TIME AND TROUBLE TO COME HERE
THIS WEEK TO HELP US DELIVER OUR MESSAGE.
WE ENVISIONED THIS GET-TOGETHER AS AN OPEN FORUM - A KIND OF
SEMINAR, IF YOU WILL. IT'S ALWAYS BEEN OUR BELIEF THAT THE MORE DISNEY
SHAREHOLDERS KNOW ABOUT THEIR COMPANY AND HOW IT'S BEING MANAGED - OR
MISMANAGED - THE MORE LIKELY THEY ARE TO SUPPORT OUR POSITION.
FOR OUR PART, WE PLAN TO LAY OUT ONE LAST TIME WHY WE BELIEVE YOU
AND YOUR FELLOW SHAREHOLDERS SHOULD JOIN US IN VOTING NO ON THE ELECTION OF
MICHAEL EISNER, GEORGE MITCHELL, JOHN BRYSON, AND JUDITH ESTRIN AS DISNEY
DIRECTORS. ROY AND I WILL ALSO DISCUSS WHY WE RESIGNED FROM THE DISNEY
BOARD AND WHY WE ARE SEEKING TO REPLACE MICHAEL EISNER AS THE COMPANY'S
CEO.
BUT AS MUCH AS WE HAVE TO SHARE WITH YOU, WE HAVE NO INTENTION OF
TURNING THIS INTO A ONE-SIDED LECTURE. WE ARE ANXIOUS TO MEET YOU AND HEAR
WHAT YOU HAVE TO SAY. SO AFTER WE'VE FINISHED OUR LITTLE PRESENTATION,
WE'LL BE THROWING OPEN THE FLOOR TO YOUR QUESTIONS AND COMMENTS - FOR WHAT
WE HOPE WILL BE A LIVELY AND INFORMATIVE EXCHANGE OF VIEWS.
IN A MOMENT, I'M GOING TO TURN THE PODIUM OVER TO MY COLLEAGUE MIKE
MCCONNELL, WHO'S GOING WALK YOU THROUGH EXACTLY WHERE WE BELIEVE THE DISNEY
COMPANY HAS GONE WRONG AND WHAT WE BELIEVE HAS TO BE DONE TO FIX IT.
WHAT MIKE IS GOING TO FLESH OUT FOR YOU IS THE STORY OF A
REMARKABLE CORPORATE LEGACY THAT, SAD TO SAY, IS BEING SQUANDERED BY A
MANAGEMENT THAT DOESN'T SEEM TO HAVE THE FAINTEST IDEA OF WHAT IT IS
LETTING SLIP THROUGH ITS FINGERS.
IT'S ALSO A CLASSIC CASE STUDY OF FAILED CORPORATE GOVERNANCE - OF
A CEO WHO REFUSES TO BROOK CRITICISM, NURTURE TALENT, OR EVEN GROOM A
SUCCESSOR - AND A BOARD THAT IS UNWILLING OR UNABLE TO HOLD HIM ACCOUNTABLE
FOR HIS ACTIONS.
I DON'T KNOW ABOUT YOU, BUT I'M TIRED OF WATCHING MANAGEMENT GET
RICH WHILE SHAREHOLDERS GET SUBSTANDARD RETURNS. I'M TIRED OF PUTTING UP
WITH A BOARD THAT FOR ALL ITS TALK OF "TRANSPARENCY" AND "BEST PRACTICES,"
DOESN'T SEEM TO KNOW THE FIRST THING ABOUT EFFECTIVE CORPORATE GOVERNANCE,
SENSIBLE COMPENSATION PRACTICES, OR MEANINGFUL INDEPENDENCE.
IT'S TIME THE DISNEY BOARD REMEMBERED THAT IT'S THERE TO OVERSEE
MANAGEMENT, NOT CODDLE IT - THAT THE JOB OF DIRECTORS IS TO DIRECT. TO
REPRESENT THE INTERESTS OF SHAREHOLDERS BY TAKING AN ACTIVE ROLE IN SHAPING
THE COMPANY'S FUTURE. TO SUPPORT MANAGEMENT WHEN IT BUILDS VALUE - AND TO
HOLD IT ACCOUNTABLE WHEN IT DOES NOT.
THAT'S WHAT SAVEDISNEY.COM IS ABOUT. AND WITH YOUR SUPPORT AT
TOMORROW'S ANNUAL MEETING, IT'S A MESSAGE THE BOARD WILL NOT BE ABLE TO
IGNORE.
THANK YOU.
*****
Introduction
------------
Good afternoon ladies and gentleman. My name is Michael McConnell and
thank you for coming to our rally today. In my brief remarks today, I
will discuss why we have embarked on this journey, share with you
objective facts regarding Disney's financial performance, why we
believe that the Board has not yet embraced good governance and
lastly, that we believe today marks a new beginning for The Walt
Disney Company.
Our Campaign has been predicated on two primary themes:
1. Financial performance has been poor for the better part of 8
years
2. Your Board has been ineffective and its governance unacceptable
We issued a Request - Vote No on Michael Eisner and 3 Directors to
send a Message
Shareholders have Answered - management change is needed and Board
must improve
The Future will be bright with fresh, new leadership committed to the
Creative voice
The next three slides demonstrate the long and steady deterioration in
Disney's underlying corporate financial performance measures.
Return on Assets
----------------
This chart shows the decline in return on assets - down approximately
70% from 1995 levels.
Return on Equity
----------------
These bar charts show a similar decline in return on equity - again
with 1995 being the peak year
Return on Invested Capital
--------------------------
Return on invested capital tends to be a more comprehensive and
important calculation of how well, or in this case - not so well - a
management team is investing and managing its capital base. As one can
see, this measure too has declined substantially over the last 8
years.
Marginal Value Creation
-----------------------
Not surprisingly, given the poor underlying corporate performance, the
Disney stock price performance has been dismal over the last 8 years.
Investors would have been significantly better off purchasing risk
free treasury securities backed by the US government than owning
shares of Disney stock.
Comparative Financial Returns
-----------------------------
Additionally, investors would have achieved a much higher return had
they been invested in any of the standard or comparable indices since
1996: Dow Jones, S&P 500 or S&P 500 Media composite.
Recent Results: Recovery or Resumption of Growth
-------------------------------------------------
Despite strong first quarter earnings, we do not believe the earnings
improvement is indicative of a sustainable recovery. Two points:
First - a large portion of the increase in earnings this year will be
driven by a series of one-off items:
1. The huge success of Nemo and Pirates
2. Cost cutting at the ABC Network; and
3. The impact of non-cash accounting at ESPN
After considering these items, "growth" in EPS less than 5% as
compared to last year.
Historical Financial Performance (two charts)
---------------------------------------------
Now - looking over a longer period of time, this chart shows Disney's
EPS figures since 1998. Even if the Company achieves its forecasts for
this year, EPS will only approximate the levels achieved six years ago
- neither the Board nor the management should take comfort from simply
"treading water" for six years.
Strategic Track Record
----------------------
Here we see the many reasons why underlying corporate performance and
stock price have both been so dismal for so long.
We ask you the shareholders and the Board - how much more must go
wrong before management is held accountable?
Future Pennies to Drop
----------------------
Looking forward, we unfortunately believe that there are more "pennies
to drop".
Likely to be first is the potential bankruptcy of Euro Disney.
We continue to monitor closely the sale of the Disney Stores
Fox Family or ABC Family continues to struggle and is now losing money
Management has indicated to us that "technology" is a key initiative
of management. Yet, the much heralded "technology" launch called
MovieBeam appears to be struggling and will most likely result in a
write-off.
Lastly, the ABC Network continues to struggle in fourth place among
the broadcasters and will most likely have to provide significant make
goods to its customers.
Governance
----------
Governance has been a focus of your Board's attention over the last
several years. Regrettably, most of this dialogue has been more form
than substance.
Its own actions belie its strident claims - for example,
1. Ms.Estrin - chair of the compensation committee, consulted with
Mr. Eisner's personal attorney, when determining Eisner'
bonuses.
2. Mr. Bryson imprudently accepted the Chair of the Governance
Committee despite the fact that he was not independent - his
wife earns millions as an executive at the Lifetime cable
network owned 50% by Disney
3. Mr. Mitchell supported and accepted a Presiding Director role
that has virtually no power at the Board level - a fancy title
for a meeting coordinator.
4. Mr. Eisner and the Company remain subject to an SEC
investigation
5. Both the Board and management remain in "Denial" - this is
culturally imbedded in your leaders - a cursory read of the
Company's public statements over the last three months is all
the evidence one needs of this serious problem.
In summary, despite its repeated statements, governance remains a
problem at Disney and, without significant action and changes, the
Board's credibility will only suffer further damage.
The Future
----------
While the past problems at Disney have been significant, as result of
the unprecedented support for our withhold campaign, for the first
time in a long while, we believe the future is brighter.
What has to happen - your Board must listen to the powerful messages
being sent:
1. It must replace Michael Eisner
2. It must hire new leadership that creates a credible strategic
vision
3. Central to the future must be the Creative voice and soul of
the Company
4. and lastly, your Board must be responsive to all important
constituents - shareholders, employees, customers, suppliers -
and must become more effective as their representatives.
We want to thank each of you for helping us Restore the Wonderful
magic of The Walt Disney Company.
* * * * *
ROY E. DISNEY "SAVEDISNEY.COM" MEETING REMARKS
Thank you. Let me first introduce - and thank - my family. And, thank you
Stanley and Mike.
And even more, thank you all...everyone who has come all this way - or who
has written us on our website with your very passionate and incisive
thoughts about The Walt Disney Company...not to mention all of you who
will, I hope, continue to stay in contact with us after the events of today
and tomorrow are behind us.
And in that way, I want to introduce a little dose of reality into the
conversation. This is certainly not something never mentioned before, but I
want everyone to realize that what we do and say here, and even more so,
what happens at tomorrow's annual stockholder's meeting, is only a step in
a process that will continue until we - working and acting together - make
the changes at Disney that need to be made.
Tomorrow - as much as we wish it - won't accomplish that completely...but
time will. Patience is, as you are always being told, a virtue.
So...I know that's a little depressing...but it is actually the good
news...because it means that things will change.
There's a pretty long list of changes that we'd all like to see, and I
think the short list would include a new management, improving the
cleanliness, the maintenance, and the guest services at the parks...and
that would include putting smiles back on the faces of both cast members
and our guests...making better movies - and television shows - especially
including animation...fixing the ABC network to drag it up from its
perennial fourth place...to be better corporate citizens of the country and
the world...and to just plain be Disney again.
Right now, we've got a management that out of indifference or ignorance
hasn't hesitated to break faith with the millions of people who for nearly
75 years have regarded the Disney name as a guarantee of unparalleled
quality family entertainment and exceptional value.
At the same time, as Mike McConnell has just shown you, management has
failed miserably at creating increased value for shareholders. Indeed,
despite some recent short-term gains - which actually only put us back
where we were eight years ago - they've been devaluing our assets - turning
a unique institution into "just another entertainment company," unable to
command the consumer recognition and customer loyalty that made us a market
leader.
Which leads me to the subject of our thoughts for the future of The Walt
Disney Company. A tremendous amount of your emails have asked us to be
specific...what would we do, who would we hire or fire, what might happen
in every division of the company...and those are just a few of the
questions.
Well, I think I would be nuts to stand up here and lay out some kind of a
scheme...but I am happy to stand here and tell you what I believe.
It's my belief that a terrific lot of people's memories and dreams are tied
up in the idea of what constitutes "Disney," and because of that, there's a
terrific amount of nostalgia and hope connected to us, maybe more than any
other business in the world.
There really isn't any big secret to how the Disney Company created
enormous shareholder value in the past. We did it by trusting the talents
and imagination of our creative artists - and by supporting them with the
resources they required.
And so the trick is to pay heed to that enormous reservoir of
memories...from Mickey Mouse to Snow White to Fantasia to Cinderella to The
Little Mermaid and Beauty and the Beast...and recognizing that the reason
we all remember them so well is that, when we first saw them, they were
fresh and newly minted and shiny and in some way fulfilling to each of us.
And that same process is the key to our future.
We are a company of the future, capable of continuing to make dreams -
brand new dreams - come true, and also a company that has the richest
history and tradition in the world.
I've been accused by some in the company that I want to somehow take the
company backwards, to relive the past. That is nonsense and impractical.
But, let me tell you, if that means that creativity is in charge, ideas are
the engine that runs the company, artists and executives trust and respect
each other...then I'm happy to live again in that kind of world.
That's not the world that presently exists at the company, and that's what
needs to change.
In my view, the Disney ideal has always been about the future and about the
people who will create that future. It's about hope, about a belief in the
essential goodness in all of us, about trusting one another, about the idea
that knowledge is invaluable to growth, and that happiness is something we
all aspire to and all too seldom achieve...and that it's not only possible
but necessary to have fun along the way.
There was a time, not too long ago, when theDisney Company embodied all
those ideals. And when it did, it not only did its best work, but it
produced the most value for shareholders.
Together, we can make that change. So as the slogan says, Let's bring back
the magic. Onward to the future.
Thank you.
Now to the Q & A.
*****
STANLEY GOLD - SHAREHOLDER MEETING REMARKS
MARCH 3, 2004
GOOD MORNING.
MY NAME IS STANLEY GOLD. I WANT TO THANK THE BOARD AND MANAGEMENT
OF THE WALT DISNEY COMPANY FOR GIVING ME AN OPPORTUNITY TO SPEAK TO YOU
TODAY.
AS SOME OF YOU MAY KNOW, I WAS A DIRECTOR OF THE WALT DISNEY
COMPANY FOR 15 YEARS UNTIL ABOUT THREE MONTHS AGO.....WHEN, ALONG WITH ROY
DISNEY, I RESIGNED FROM THE BOARD.......SINCE THEN, ROY DISNEY AND I HAVE
BEEN ON A MISSION - A MISSION NOT TO PROMOTE OURSELVES BUT TO SAVE OUR
COMPANY.
NOW I KNOW THERE ARE SOME PEOPLE WHO WOULD SAY, "SAVE IT FROM WHAT?
THE WALT DISNEY COMPANY IS DOING JUST FINE."
I WISH THAT WERE TRUE. BECAUSE, I WILL TELL YOU, SPEAKING OUT
PUBLICLY AGAINST THE BOARD AND MANAGEMENT OF A COMPANY WE TRULY LOVE HAS
NOT BEEN A PLEASANT EXPERIENCE FOR EITHER OF US. ........INDEED, IT'S THE
LAST THING --- AND MOST DIFFICULT THING -- WE EVER WANTED TO DO.
BEFORE ROY DISNEY AND I TOOK OUR CONCERNS PUBLIC, WE SPENT
LITERALLY YEARS TRYING TO WORK FROM WITHIN THE BOARDROOM --- TRYING TO GET
THE BOARD TO FACE UP TO WHAT WE BELIEVED WERE SERIOUS MANAGEMENT AND
GOVERNANCE PROBLEMS AND CHALLENGES THAT NEEDED TO BE CONFRONTED.
UNFORTUNATELY, THE BOARD WAS UNWILLING TO LISTEN.
UNFORTUNATELY, THE BOARD WAS UNWILLING TO HOLD MANAGEMENT
ACCOUNTABLE FOR ITS FAILURES - UNWILLING EVEN TO ACKNOWLEDGE THERE HAD BEEN
FAILURES. THE BOARD PREFERRED INSTEAD TO KEEP ITS HEAD BURIED FIRMLY IN THE
SAND AND TO CONDUCT "BUSINESS AS USUAL."
THE FACT THAT WE HAD A CEO WHO REFUSED TO BROOK CRITICISM, NURTURE
TALENT, OR EVEN GROOM A SUCCESSOR DID NOT SEEM TO BOTHER THEM.
THE FACT THAT DISNEY STOCK (FOR ALMOST A DECADE) WAS
UNDER-PERFORMING - NOT JUST THE MARKET AS A WHOLE, BUT THE MEDIA SECTOR IN
PARTICULAR - DID NOT SEEM TO BOTHER THEM.
THE FACT THAT OPERATING INCOME WAS VIRTUALLY FLAT FOR NEARLY A
DECADE DESPITE THE REINVESTMENT OF SOME $15 BILLION IN CAPITAL DID NOT SEEM
TO BOTHER THEM.
THE FACT THAT MANAGEMENT'S GLOWING PROJECTIONS AND FLASHY BUSINESS
PLANS DIDN'T PAN OUT - TIME AFTER TIME AFTER TIME - DID NOT SEEM TO BOTHER
THEM.
BUT, THINGS WILL BE DIFFERENT AFTER TODAY. FROM TODAY ON THE DISNEY
BOARD CAN NO LONGER PROTEST THAT THEY DON'T WANT TO BE BOTHERED.
FROM TODAY ON, THE DISNEY BOARD CAN NO LONGER PRETEND THEY HAVE A
GREAT MANAGEMENT TEAM PRODUCING SUPERIOR RESULTS.....THEY DON'T...... AND
THE SHAREHOLDERS KNOW THEY DON'T.
FROM TODAY ON, WE THE SHAREHOLDERS, HAVE SENT MICHAEL EISNER AND
THIS BOARD A MESSAGE. AFTER THE VOTES ARE COUNTED, IT IS MY BELIEF THAT
MORE THAN 40% OF THE SHAREHOLDERS COULD HAVE WITHHELD THEIR VOTES FROM
MICHAEL EISNER BEING RE-ELECTED TO THIS BOARD, AN UNPRECEDENTED VOTE OF NO
CONFIDENCE IN THE ANNALS OF AMERICAN BUSINESS. MOREOVER, I BELIEVE THAT
MORE THAN 20% OF SHAREHOLDERS COULD HAVE WITHHELD THEIR VOTES FOR THE
RE-ELECTION OF DIRECTORS GEORGE MITCHELL, JOHN BRYSON, AND JUDITH ESTRIN.
FURTHER, 6 OF THE 11 DIRECTORS CURRENTLY STANDING FOR RE-ELECTION
TODAY HAVE LIKEWISE RECEIVED NO RECOMMENDATION FROM ONE OR MORE OF THE
PROXY ADVISORY SERVICES TO WHICH MANY OF THE INSTITUTIONAL SHAREHOLDERS
SUBSCRIBE.
EVEN MORE DAMNING TO THIS BOARD ARE THE CONCLUSIONS REACHED BY THE
PROXY ADVISORY SERVICES, CREDITABLE GOVERNANCE EXPERTS IN THE FIELD AND
MAJOR PUBLIC INSTITUTIONAL SHAREHOLDERS.
LET ME READ JUST A FEW OF THE INDICTMENTS OF THIS BOARD AND THIS
MANAGEMENT BY INDEPENDENT OUTSIDE THIRD PARTIES WHO HAVE SERIOUSLY
CONSIDERED THE BEHAVIOR OF THE BOARD AND MANAGEMENT.
"...SHAREHOLDERS INTERESTS ARE BEST SERVED BY A BOARD THAT IS ON
NOTICE THAT SHAREHOLDERS ARE WATCHING AND HAVE NOT FORGOTTEN PAST
INDISCRETIONS. HERE, THOSE PAST FAULTS ARE MANY. THE DISNEY BOARD HAS BEEN
NOTORIOUSLY INSULAR, FAMOUSLY GULLIBLE AND BLINDLY LOYAL TO MR. EISNER."
GLASS LEWIS REPORT - DATED FEBRUARY 25, 2004
"BOARD TIES TO DISNEY MANAGEMENT ARE OMNIPRESENT."
"....AT THE END OF THE DAY, ALL ROADS LEAD BACK TO EISNER." ---
INSTITUTIONAL SHAREHOLDER SERVICES REPORT - DATED FEBRUARY 11, 2004
HOW DID THIS HAPPEN?
HOW COULD SO MANY MEN AND WOMEN OF GOOD WILL ON THE DISNEY BOARD,
FAIL TO RECOGNIZE OR ACKNOWLEDGE THE PROBLEMS?
HOW COULD SO MANY MEN AND WOMEN OF GOOD WILL FAIL TO DO THE RIGHT
THING? --- BRING IN NEW MANAGEMENT; ENCOURAGE CREATIVITY WITHIN THE
COMPANY'S MANAGEMENT RANKS AND HOLD THAT MANAGEMENT ACCOUNTABLE FOR
HIGH STANDARDS OF PERFORMANCE.
LET ME SUGGEST TO YOU THAT IT HAPPENS SLOWLY AT FIRST --- BIT BY
BIT --- UNTIL DIRECTORS ARE COMPROMISED TO THE POINT AT WHICH THEY ARE NO
LONGER ABLE TO DO THE RIGHT THING. THAT IS WHAT HAS HAPPENED TO THIS BOARD.
LET ME GIVE YOU A FEW PERTINENT EXAMPLES:
(1) FOR EIGHT YEARS, DIRECTORS IN THIS COMPANY HAVE BEEN PROMISED
BY MICHAEL EISNER AND ROBERT IGER THAT THIS WAS THE YEAR THAT THE A.B.C.
TELEVISION NETWORK WOULD TURN AROUND. WITH THE BEGINNING OF EACH FALL
SEASON DIRECTORS WOULD RECEIVE FLOODS OF E-MAILS FROM MICHAEL PRAISING THIS
PROGRAM OR THAT, TELLING US ABOUT HOW MUCH PROGRESS WAS BEING MADE IN THE
RATINGS. BUT AS THE SEASON WORE ON PROGRAMS FAILED; THE E-MAILS STOPPED;
AND THE BOARD SHOWED NO CURIOSITY IN FINDING OUT WHAT HAPPENED. MORE
IMPORTANTLY, THE BOARD FAILED TO HOLD MANAGEMENT ACCOUNTABLE WHEN IT CAME
TO COMPENSATION, ALWAYS REWARDING MICHAEL AND BOB REGARDLESS OF A.B.C.'S
PERFORMANCE. TODAY, THE A.B.C. NETWORK CONTINUES TO BE IN 4TH PLACE.
(2) WHEN THE COMPANY BOUGHT THE FOX FAMILY CHANNEL (RE-NAMED A.B.C.
FAMILY CHANNEL), THE DIRECTORS WERE GIVEN A POSITIVE PRESENTATION ON HOW
OUR COMPANY WOULD CHANGE PROGRAMMING AND PRODUCE A 20% ANNUALIZED INTERNAL
RATE OF GROWTH OVER THE NEXT 5 YEARS. WHEN THAT FAILED TO MATERIALIZE ....
A MERE 3 MONTHS AFTER ACQUISITION, THE BOARD HELD NO ONE ACCOUNTABLE. NO
EXECUTIVE WAS FIRED, NO EXECUTIVE WAS CRITICIZED --- BUT BOTH MR. EISNER
AND MR. IGER RECEIVED -- IN MY OPINION -- LAVISH AND UNJUSTIFIED BONUSES.
WHILE WE THE SHAREHOLDERS WATCHED THE VALUE OF OUR EQUITY DECLINE, MICHAEL
EISNER HAS NEVER HAD A BAD YEAR.
(3) WHEN IT CAME TO GOVERNANCE, THIS BOARD SUPPORTED MICHAEL
EISNER'S USE OF GOVERNING RULES TO ATTACK HIS CRITICS. THE BOARD HAD
DISREGARDED COMMON SENSE; THEY DECLARED ME AS A NON-INDEPENDENT DIRECTOR
BECAUSE MY DAUGHTER WORKED FOR THE COMPANY IN A NON-EXECUTIVE POSITION ---
BUT SIMULTANEOUSLY CRAFTED RULES TO KEEP JOHN BRYSON, AN EISNER LOYALIST,
INDEPENDENT --- NOTWITHSTANDING HIS WIFE'S EMPLOYMENT BY THE LIFETIME
CHANNEL, A 50% OWNED SUBSIDIARY OF THE WALT DISNEY COMPANY WHERE SHE WAS
PAID MULTIPLES OF MY DAUGHTER'S COMPENSATION.
(4) ANOTHER EXAMPLE -- THE COMPANY INSISTED IN ITS PRESS RELEASES
THAT IT WANTED TO FOLLOW "THE BEST PRACTICES" WITH RESPECT TO GOVERNANCE.
WHEN IRA MILSTEIN, THE GOVERNANCE LAWYER HIRED BY MICHAEL, TESTIFIED BEFORE
THE CONGRESS THAT THE MOST IMPORTANT RULE OF GOVERNANCE WAS TO SPLIT THE
CHAIRMANSHIP AND THE CEO-SHIP, THE DISNEY BOARD RETREATED FROM THE "BEST
GOVERNANCE PRACTICES" STANDARD AND PROTECTED MICHAEL EISNER WHO WANTED TO
HOLD BOTH TITLES. THIS RETREAT FROM COMMON SENSE WAS LED BY GEORGE
MITCHELL, WHO SHOULD HAVE KNOWN BETTER.
THE SAME THEME APPEARS TIME AND TIME AGAIN --- PROTECT MICHAEL
EISNER AT THE EXPENSE OF THE SHAREHOLDERS; PROTECT MICHAEL FROM QUESTIONING
DIRECTORS.
BEFORE LONG, YOU BUY INTO THE MYTH THAT MICHAEL IS IRREPLACEABLE;
THAT NO ONE ELSE CAN DO THIS JOB; WITHOUT HIM THE COMPANY WILL FALL APART.
IN ESSENCE, YOU HAVE COMPROMISED YOUR SOUL --- LOST YOUR INTEGRITY.
IT GOES ON FURTHER. ANDREA VAN DE KAMP RAISED SERIOUS CONCERNS
ABOUT EXECUTIVE COMPENSATION; RAISED CONCERNS ON THE FAILED EFFORTS OF THE
NEW WALT DISNEY STUDIO PARK IN PARIS; AND ON THE FORM OVER SUBSTANCE
GOVERNANCE RULES THAT MICHAEL AND HIS PAID ADVISORS WERE INSISTING UPON.
WHAT TO DO?
MICHAEL ORGANIZED A COUP TO GET ANDREA OFF THE BOARD. AND, BY THEN,
MOST BOARD MEMBERS WERE SO COMPROMISED THEY NO LONGER HAD THE COURAGE TO
TELL MICHAEL "NO." SOME HAVE EVEN TOLD ME THEY REGRETTED THIS DECISION, BUT
THE PRESSURE WAS SO DIFFICULT TO OVERCOME THAT ONE DIRECTOR ACTUALLY WEPT
AT THE BOARD MEETING AT THIS OUTRAGE. BUT THE BOARD, WITH A FEW EXCEPTIONS,
FELL IN LINE AND ANDREA WAS DISMISSED FROM THE BOARD.
THESE ARE JUST A FEW EXAMPLES OF THE MANY OCCASIONS WHEN THIS BOARD
FAILED TO ASSERT ITS INDEPENDENCE AND FAILED TO MAKE MANAGEMENT, AND
ESPECIALLY MICHAEL EISNER ACCOUNTABLE FOR THEIR BEHAVIOR.
THIS IS THE STORY THAT ROY DISNEY AND I HAVE TOLD AS WE HAVE
CRISSCROSSED THE COUNTRY IN THE LAST 30 DAYS TALKING TO SMALL AND LARGE
SHAREHOLDERS ALIKE. FROM THE RESPONSES WE HAVE RECEIVED, AND FROM THE "NO"
VOTES WE ARE RECEIVING TODAY, WE BELIEVE THAT OUR MESSAGE HAS RESONATED
LOUD AND CLEAR. FOR THAT WE ARE GRATEFUL AND WE THANK YOU.
BUT THAT IS THE PAST. WHAT ABOUT THE FUTURE? TODAY IS A NEW DAY!
THE OWNERS OF THIS COMPANY HAVE SPOKEN AND THE BOARD HAS A SECOND
CHANCE STARTING TODAY TO GET IT RIGHT. IT NOW HAS AN OPPORTUNITY TO CORRECT
THE WRONGS AND DO WHAT IS RIGHT; TO DO WHAT IS IN THE BEST INTERESTS OF THE
SHAREHOLDERS.
LET ME BE CLEAR, NO HALF MEASURES, NO EXCUSES, NO AMOUNT OF
SPINNING WILL BE TOLERATED.
SHAREHOLDERS HAVE WAITED TOO LONG AND HAVE SPOKEN TOO CLEARLY.
MICHAEL EISNER MUST LEAVE NOW.
IT IS NO LONGER SUFFICIENT TO SEPARATE THE ROLE OF CHAIRMAN AND
CEO. THAT IS NOT WHAT THIS CAMPAIGN HAS BEEN ABOUT.
I URGE THE BOARD TO READ THE COMMENTS OF THE MAJOR ADVISORY
SERVICES AND ITS MAJOR SHAREHOLDERS THAT HAVE BEEN PUBLISHED IN THE PAST
FEW DAYS:
"WE HAVE LOST COMPLETE CONFIDENCE IN MR. EISNER'S STRATEGIC VISION
AND LEADERSHIP IN CREATING SHAREHOLDER VALUE IN THE COMPANY." --- SEAN
HARRIGAN, PRESIDENT OF THE CALPERS BOARD OF ADMINISTRATION.
"WHAT DISNEY MUST DO IS "SEPARATE THE POSITIONS OF CHAIRMAN AND
CHIEF EXECUTIVE AND....REPLACE MR. EISNER AS SOON AS POSSIBLE." --- NEW YORK
STATE COMPTROLLER, ALAN HEVESI.
"EISNER HAS CREATED NO VALUE FOR SHAREHOLDERS FOR THE PAST SEVEN
YEARS." -- ORIN KRAMER, CHAIRMAN OF THE NEW JERSEY STATE INVESTMENT
COUNCIL.
FORMER SENATOR GEORGE MITCHELL SHOULD NO LONGER SERVE AS PRESIDING
DIRECTOR. ALTHOUGH HE HAS MADE A GREAT CONTRIBUTION TO AMERICAN LIFE AS A
PUBLIC SERVANT -- AND WE ARE GRATEFUL FOR HIS SERVICES TO OUR COUNTRY, IN
THE BOARDROOM, HE DOESN'T HAVE THE ABILITY OR COURAGE TO CONFRONT A CEO
BENT ON COVERING UP POOR PERFORMANCE AND USING BULLYING TACTICS TO LAY
WASTE TO DIRECTORS WITH MINORITY OPINIONS.
JUDITH ESTRIN MUST NO LONGER BE INVOLVED IN COMPENSATION DECISIONS.
SHE HAS SHOWN BY HER WILLINGNESS TO CONSULT WITH MICHAEL EISNER'S OUTSIDE
PERSONAL LAWYER TO GET MICHAEL THE COMPENSATION THAT HE WANTS. THAT ALONE
SHOWS SHE LACKS THE INDEPENDENCE TO CONFRONT A CEO AND MAKE HIM ACCOUNTABLE
FOR HIS ACTIONS.
JOHN BRYSON, WHO WAS NEVER INDEPENDENT, FAILED TO STAND UP TO
MICHAEL, AS CHAIRMAN OF THE GOVERNANCE AND NOMINATING COMMITTEE, DURING THE
DISMISSALS OF ANDREA VAN DE KAMP AND ROY DISNEY FROM THE BOARD.
WE THE SHAREHOLDERS, ARE ENTITLED TO A BETTER BOARD AND A BETTER
MANAGEMENT AND WE HAVE SAID THAT REPEATEDLY TODAY WITH OUR VOTES. LET ME
SAY ON MY BEHALF, AND ON BEHALF OF THE DISNEY FAMILY, THAT WE ARE GRATEFUL
FOR YOUR SUPPORT AND GRATEFUL TO HAVE YOU AS PARTNERS. LET ME SAY THAT WE
SEE TODAY'S MEETING AS THE FIRST STEP IN REFORMING THE COMPANY --- IN OUR
WORDS, LITERALLY SAVING DISNEY.
WE ARE NOT LOOKING FOR COSMETIC RULE CHANGES, WE ARE SEEKING REAL
AND MEANINGFUL CHANGE.
IT IS OUR INTENTION TO BE HERE NEXT WEEK, NEXT MONTH AND NEXT YEAR,
IT IS OUR INTENTION TO BE HERE FOR AS LONG AS IT TAKES. WE INTEND TO PRESS
FORWARD AND KEEP DISNEY MANAGEMENT, AND ESPECIALLY ITS BOARD, ACCOUNTABLE.
OUR POLICY IS SIMILAR TO THAT OF RONALD REAGAN'S WHEN HE SAID: "TRUST AND
VERIFY." WE TRUST THAT THIS BOARD HAS HEARD OUR MESSAGE TODAY AND THAT IN A
VERY SHORT PERIOD OF TIME WILL DO WHAT NEEDS TO BE DONE; FIND A NEW CEO AND
A NEW TEAM WITH STRATEGIC VISION AND AN ABILITY TO CREATE SUPERIOR,
CREATIVE AND FINANCIAL PERFORMANCE. BUT WE WILL NOT TRUST ALONE; WE WILL
VERIFY; WE WILL BE WATCHING; WE WILL BE USING ALL MEANS AVAILABLE TO US TO
MAKE SURE THAT REAL REFORM HAPPENS. IF THIS BOARD FAILS TO SEIZE THIS
SECOND OPPORTUNITY, WE PROMISE YOU THAT WE WILL BE BACK. WE HOPE THAT WON'T
BE NECESSARY, BUT WE ARE REALISTIC AND WE KNOW THAT CHANGE COMES HARD.
THIS HAS NOT BEEN A PLEASANT CAMPAIGN FOR US ---- BUT WE WILL NOT,
AND CANNOT, SHIRK FROM OUR RESPONSIBILITY TO THE WALT DISNEY COMPANY
....... TO RETURN IT TO ITS STATUS AS ONE OF THE MOST ADMIRED COMPANIES IN
THE WORLD. WE HOPE AND TRUST THE BOARD WILL DO THE SAME. WE HOPE AND TRUST
THAT THE SHAREHOLDER/OWNERS OF DISNEY WILL SEE THOSE RESULTS IN THE
SHORTEST TIME POSSIBLE.
THANK YOU FOR YOUR SUPPORT.
*****
ROY. E DISNEY - SHAREHOLDERS MEETING REMARKS
First of all, I want to thank everyone for your many letters and emails and
all your encouragement in this campaign.
Stanley has talked about why we need to make a change. I want to spend a
few minutes talking about what kind of change we need.
The Walt Disney Company is more than just a business. It is an authentic
American icon - which is to say that over the years it has come to stand
for something real and meaningful and worthwhile to millions of people of
all ages and backgrounds around the world.
This is not something you can describe easily on a balance sheet, but it is
tangible enough. Indeed, it is the foundation on which everything we have
accomplished as a company - both artistically and financially - is based.
I believe our mission has always been to be bringers of joy, to be
affirmers of the good in each of us, to be - in subtle ways - teachers. To
speak, as Walt once put it, "not to children but to the child in each of
us."
We do this through great storytelling, by giving our guests a few hours in
another world where their cares can be momentarily put aside, by creating
memories that will remain with them forever.
This is the core of what we've come to call "Disney," and to my mind, our
single biggest need is to get back to that core.
In my view, the essence of who we are lies in the business of film -
especially animation - and the stories, characters, music, and humor that
well-made films generate. This is the engine that drives the train, and
everything we do as a company basically flows from it.
You will note that I refer to our film work as a business. Whatever else it
may be, it is always that as well - a business that needs to be run on a
sound basis by people who are sensible as well as sensitive.
My Dad was quoted once as saying, "It's easy to make decisions, once you
know what your values are." Unfortunately, our corporate values have been
compromised in recent years.
In large part, this is the result of a cynical management's belief that, in
the absence of ideas, the road to success is to cut back on everyone and
everything that once made you successful, that you don't really need to
give your guests value for money, that creativity and originality are
luxuries you can no longer afford...that art and artists are commodities to
be bought and sold like any other office supply.
To me, the wrong-headedness of these beliefs is self-evident.
The creative process is the lifeblood of the Disney Company. If it is to
thrive, we must do everything possible to establish an environment in which
it can once again flourish.
Creativity is a funny thing - difficult to quantify, but obvious when it's
missing. It's a living, breathing force with a life of its own, and it
tends to flower among individuals or small groups. It doesn't always show
up on demand ... or at convenient times or places. And it often gets killed
by committees or by something called strategic planning. So we need to
always be on the lookout for ways to nurture it, and not let it be trampled
by a lowest-common-denominator mentality.
One of creativity's worst enemies is something I call "Institution Think."
This is a very tricky issue. After all, Disney is an institution. But that
doesn't mean it has to think like one.
Let me tell you about the danger of Institution Think: It is often said
that our company's most valuable asset is the Disney name. You'll get no
argument from me. I kind of like the name myself. But, in recent times,
there's been a tendency to refer to it as the "Disney brand." To me, this
degrades Disney into a "thing" to be bureaucratically managed, rather than
a "name" to be creatively championed. And lately I've been seeing Mickey
receive this treatment too, as well as Pooh and a lot of others.
As I've said on other occasions, branding is something you do to cows. It
makes sense if you're a rancher, since cows do tend to look alike. It's
also useful to lots of businessmen, and they brand things like detergents
or shoes for almost the same reason as ranchers. Branding is what you do
when there's nothing original about your product.
But there is something original about our products. Or at least there used
to be. Our name already means something to consumers.
I really believe that if we keep thinking of Disney as a "brand," we will
lose all the meaning that has been built into those six letters for more
than three-quarters of a century. We need to get back to thinking of it as
a "name" that needs to be prized and enhanced, escape the clutches of
Institution Think and resume our trajectory of creative and financial
success.
How did the Disney Company create enormous shareholder value in the past?
Two ways: first by trusting the talents and imagination of its creative
people - and then by supporting them with the resources they required.
I don't care what current management may tell you. The plain fact is, you
can't fool all the people all the time. Nor can you succeed in our business
by trying to get by on the cheap. Consumers know when they are getting
value for their money, and they know when you're trying to sell them
second-hand goods.
So what kind of change do we need to make? It's really quite simple. We
need to install a new management team, one that understands and believes in
the enormously valuable legacy that's been entrusted to us.
Speaking as someone with the last name of "Disney," it is my firm belief
that we are not a commodity. As long as we continue to believe in the power
of creative ideas, then our best years still lie ahead.
Thank you for your attention.