MUMBAI:" Without the support of its employees, how can this CEO get the company back on track?" This was just one the many cutting remarks made by Disney's former vice chairman Roy Disney about the company's CEO Michael Eisner.
The dispute about the direction the media conglomerate is going in as well as the need for accountability from the board is reaching boiling point.
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."
