LOS ANGELES - The Walt Disney Co. said Sunday its president, Robert
Iger, will succeed Michael Eisner as chief executive and that Eisner
will leave his post one year earlier than previously announced.
The company said Iger was unanimously elected by the board at a meeting
Saturday and will take charge Oct. 1, which is the start of Disney's
2006 fiscal year. Eisner will step down the day before, although he
will remain on the board for another year. Disney will pay him through
Sept. 30, 2006, when his contract expires.
Eisner will end his tenure at the company after serving 21 years. Iger
will become only the sixth leader of Disney in its history.
The announcement came under immediate fire from two prominent shareholders
who questioned the integrity of the process, noting Iger's insider status
and close ties to Eisner.
But Disney board chairman George Mitchell said Iger's choice came after
a "lengthy, thorough and professional selection process" that
included serious consideration of outside candidates. He declined to
be more specific, but an EBay Inc. spokesman confirmed Sunday that eBay
CEO Meg Whitman had withdrawn her application for the job Friday after
being interviewed.
"We believe Bob Iger represents the right blend of continuity,
of very successful performance, particularly over the past two years
in which Bob had played a major role...and a recognition of needed change"
in the areas of new technology and expanding the company's business
in Asia, Mitchell said during a conference call with reporters.
"This is not a huge surprise," said Paul Kim, an analyst
for New York-based Traditional Asiel Securities. He said Disney has
done a good job of cutting costs and increasing profits over the past
18 months, and Iger's challenge will be to continue that momentum.
During Sunday's conference call, Mitchell strongly denied charges made
by former board members Roy E. Disney and Stanley Gold that Eisner inappropriately
participated in candidate interviews. The two also alleged that some
external candidates declined to be interviewed because of Eisner's role.
"We find it incomprehensible that the board of directors of Disney
failed to find a single external candidate interested in the job and
thus handed Bob Iger the job by default," the two men said in a
statement. "The need for the Walt Disney Company to have a clean
break from the prior regime and to change the leadership culture has
been glaringly obvious to everyone except this board."
Mitchell said Eisner was never present during any interviews with Iger
and attended only part of one meeting with an unidentified candidate.
"That was the full extent of his interaction with any candidates,
internal or external," Mitchell said Sunday. "The allegation
is false and irresponsible."
Iger, himself a board member, did not participate in any succession
planning meetings, Mitchell said.
Mitchell also said drastic changes in the company are not needed.
"If you are a major investor and the company has produced a 60
percent increase in earnings, has just increased its dividend 14 percent,
has record cash flow and a substantial increase in return of invested
capital, you don't encourage major change," Mitchell said.
Iger, 54, who also serves as chief operating officer, was considered
a front-runner for the post from the start.
He was president of Capital Cities/ABC when Disney bought the company
in 1995, and went on to become president of the ABC Group and head of
Walt Disney International. He was named president in 2000.
He has kept a relatively low profile at the company, although he has
been more vocal about his vision for Disney since last September, when
Eisner announced plans to depart.
Iger is credited with reversing the fortunes of Disney's ABC television
network, which had slid to fourth in the ratings. The network is poised
to turn a profit this year and is improving in the ratings thanks to
hits such as "Desperate Housewives."
He also played a behind-the-scenes role in smoothing out the contentious
relationship between Eisner and Miramax Films co-chairman Harvey Weinstein.
On Sunday, Weinstein praised Iger's selection, although Disney and the
Weinsteins are still expected to sever ties later this month.
"I've had a great working relationship with Bob Iger and think
he's a terrific choice," Weinstein said.
The selection of Iger follows several rocky years for the company,
and especially for Eisner, who was removed as board chairman last year
after shareholders withheld 45 percent of their votes for his re-election
to the board.
Since then, the company's fortunes have improved, although a recent
trial over a multi-million-dollar severance paid to another former Disney
president, Michael Ovitz, and an unflattering book about Eisner's long
reign, have left his legacy in doubt.
In a letter to the board Sunday, Eisner praised the decision and said
he will not ask to be nominated for another term on the board when his
current term expires next year. Eisner also said he will not seek the
board chairmanship after Mitchell retires.
Mitchell, who will turn the board's mandatory retirement age of 72
next year, has said he will not stand for re-election at the 2006 annual
meeting.
Disney's board first split the roles last year after shareholders delivered
a stinging vote of no confidence in Eisner, who then held both titles.
