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A few days ago Roy Disney spoke to the company's institutional
investors and dwelt on the need for change and further transparency
in the company's functioning.
He said, "One of the most fundamental and important duties of a
board is to monitor and hold the CEO accountable for the long-term
performance and strategy of a company. "
One of the management failures he highlighted was that of the broadcast
network ABC. He stated that it suffered operating income losses
of around $ one billion over the last six years. The website Go.com
was writen off in excess of the same figure Disney claimed. He also
said that Fox Family was worth $ four billion less than that paid
when purchased. He also estimated that the Disney Stores would have
lost approximately $100 million over the last several years.
"In total, these mistakes of the last five years alone have cost
shareholders over $ seven billion. And yet, somehow, the shareholders
are expected,to simply look past these indisputable facts." He stressed
that the board could not allow management to hide behind years of
significant failures because of two good movies and an accounting
change that is driving 2004 growth.
He was expectedly severe on Eisner saying, "Because I knew Michael
Eisner, I knew he would use the resources of the company to protect
himself. I knew the difficulties that this board would have in challenging
and confronting him. Recent reports unfortunately confirm my instincts.
The board needs to ask itself the value to shareholders of the millions
being spent on political lobbyists and consultants across the country.
" These efforts and expenditures are shameful, have little
to do with inspiring creativity and the board remains quietly acquiescent
at best. Michael Eisner is behaving like a third world dictator
of a once great country utilising political carrots and sticks to
manipulate the electorate. His "cabinet" sits mute for fear of beheading."
He said that there were three issues facing the board at this point
in time. The first was timing in terms of when the board would be
able to find the courage to do what is right. The second issue is
whether the board go through a thorough, professional and dispassionate
process to select the next leader of Disney . The third is to measure
short term goals versus the long term outlook.
"The fourth issue is that of board transparency. Will the Board
begin to fully confront the series of legitimate questions to which
shareholders seek answers or will they continue to allow management
to "spin" half truths and incomplete facts to the company's owners?"
Disney sdaid.
He added that three years ago he and fellow Board member Stanley
Gold started feeling that fundamental change was necessary at Disney.
This was because the company's financial performance had been declining
for more than five years He claimed that optimistic projections
that had been given later often failed to materialise. Roy quit
the company's board last December. He accused the board of being
lame when it merely separated earlier this month the Chairman and
CEO roles. "This was very nearly a non-event ... a move to mollify
the shareholders by interpreting the vote as "just a governance
matter."
He said that at the board meeting on 3 March over 70 per cent of
the participants voted against their leader. "These figures
confirm my long held concern that the morale among the company's
125,000 employees, many of whom touch our guests every day, sits
at an all time low."
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