Shares of Walt Disney Co. rose Monday on news that the second-largest media and entertainment company’s board elected President and Chief Operating Officer Robert Iger to succeed Chief Executive Michael Eisner when he retires on Sept. 30. The decision, announced Sunday, ends a months-long search that began when Eisner, under pressure from Disney’s board, announced last September that he would step down within a year.
In one of his first interviews since the announcement, Iger told Bloomberg News that one of his first orders of business would be to determine whether Disney could renew its relationship with Pixar Animation Studios, the source of some of Disney’s biggest hits.
“It’s extremely important for us to create great animation,” Iger said. “But as I’ve cautioned any number of people, any relationship we have has to be the right one for shareholders.”
Iger also said Disney needs to focus on making “more great family entertainment” and that he agreed it was time for Disney to part ways with Harvey and Bob Weinstein, co-chairmen of Miramax Film Corp. “I think our interests have diverged over the years,” he said.
Disney Chairman George Mitchell called Iger, a former ABC television executive, “an experienced, talented and visionary leader who has made crucial and substantial contributions toward Disney’s strong performance.” Iger became president and chief operating officer in 2000, four years after Disney purchased Capital Cities/ABC.
The board moved over the weekend after reports that the only other candidate, eBay Inc. Chairman and Chief Executive Meg Whitman, dropped out of the running. Whitman sent an e-mail to her co-workers at eBay Monday, telling them that while she entertained talks because she has a “fond spot” for Disney, where she worked for four years through 1992, she wants to remain at eBay. “Great things remain to be done, and I very much want to be part of that future,” Whitman wrote.
Disney’s stock edged up 43 cents, 1.6 percent, to settle at $28.02 on Monday.
The board’s decision to name Iger effectively ends Eisner’s two-decade reign at Disney on his terms. He rebuilt the moribund company with a string of animated hit movies, but a number of high-profile failures marred the final several years. Last year, he lost his chairman’s post after a shareholder revolt, and nearly lost his CEO job.
Eisner neutralized his opponents last September by saying he would step down within one year. He then publicly backed Iger as his successor. Last week, dissidents were again complaining that his presence in interviews had corrupted the board’s search process.
In a press release Sunday, dissident former directors Roy E. Disney and Stanley Gold charged that the board had failed in its most important duty, the selection of a new chief executive: “Unfortunately, our concerns regarding this board’s process to replace Mr. Eisner were well-founded. 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.”
“This is the least-courageous board,” Gold said in a phone interview with CNBC from Paris. “First of all, I don’t think there was unanimity on the board. In fact, I’m quite sure there wasn’t. There was a split. But the majority wanted Iger. The whole thing was a sham. And at the end of the day it will not do the company any good.”
Another dissenting voice about the results and process was that of Christianna Wood, senior investment officer at the California Public Employees’ Retirement System, Bloomberg News reported. “They had no external candidates, so we are left to wonder how good of a CEO a they have,” Wood said at a Calpers investment committee board meeting in Sacramento. “There is some concern that this is a candidate who was hand-picked by Michael Eisner.”
The Disney board’s process appeared to deviate from the way executive searches for top public-company jobs are usually conducted. The firm hired to find a new CEO might initially talk to 20 to 30 candidates both internal and external before narrowing the field down to five or six top prospects to be interviewed by the client’s board of directors.
“The search firm would have examined numbers of people,” said Caroline Nahas, managing director of the Southern California region for Korn/Ferry International. “Remember, this is a huge job. You’re going to know the marketplace and the people who have performed in a stellar fashion.”
Nahas said the list of qualified candidates would be shortened for a company such as Disney, due to its overall size, global impact and the fact that it is both an entertainment and consumer products company.
Still, the fact that Iger and Whitman were the only candidates interviewed by Disney’s board is unusual, she said.
“From outward appearances, it is always helpful to do as exhaustive search as possible so that whoever you name, either an internal or external candidate, that you are able to demonstrate that a thorough process has been undertaken,” said Nahas, whose firm was not involved in Disney’s search for Eisner’s successor.
Iger told Bloomberg news that critics of the search process were off the mark and that from a candidate’s perspective “it was a sound and deliberate process.”
