Disney Moves On After Resignations

Walt Disney Co. held its first board meeting since the high-profile defections this week of Roy E. Disney and Stanley Gold. And the consensus among the remaining directors: Good riddance.

When board members convened for a three-hour dinner meeting Monday night at Disney’s ABC headquarters in New York, they spent nearly 45 minutes venting over the pair’s actions and expressed relief that their harshest critics were gone, a source close to the board said.

Among the directors, the source said, the two men had come to be seen as distractions because of their steady and unwarranted criticisms of Disney Chairman Michael Eisner and the board itself.

“Everyone is relieved,” the source said.

Roy Disney, the last family member on the board of the Burbank entertainment giant, and Gold, his closest ally, have accused board members of wanting to rid their ranks of dissenters. That job, they say, is now complete with their departure and that of Andrea Van de Kamp. She said she was forced out earlier this year because of her escalating criticisms of Eisner, a claim the chief executive has denied.

In resigning their directorships, Disney and Gold called for Eisner’s ouster, saying that in the last decade his leadership had damaged the company’s finances and public image. Gold was particularly critical of the board, which he accused of being little more than a “bulwark to shield management from criticism and accountability.”

During the board meeting that began Monday and resumed Tuesday, Eisner was not asked to defend himself, the source said. Board members earlier in the week had issued statements expressing their support for management.

Instead, Eisner discussed, among other things, public relations strategies “to protect the company as best as we can,” the source said. The long-serving chief executive also offered up an account of recent conversations he and other directors had with Roy Disney.

Those exchanges centered on the board’s rule requiring directors to retire after the age of 72. An exception, however, can be made for directors tied to management, and Disney, 73, believed he fell into that category.

Disney said he decided to resign from the board after he learned that his name was not going to be included on a list of directors nominated for election next year, along with Ray Watson, 76, and Thomas Murphy, 77.

On Tuesday, the board elected a new director, John S. Chen, chairman and CEO of database software firm Sybase Inc.

At Sybase, Chen, 48, has overseen a restructuring that split the company into four divisions, cushioning the effect of a falloff in database sales. He has cut the workforce from about 4,200 when he took over to about 3,900 as of last year.

“He’s very smart, fairly strong-willed,” said former Sybase CEO Mitchell Kertzman, who is now a venture capitalist in San Francisco. Chen should be seen as an encouraging choice for critics of Eisner, he said.

“He’s certainly not a pushover,” Kertzman said.

The appointment is the third independent director Disney has recruited in the last year, since the company announced a series of corporate governance initiatives in response to criticism that its board is a rubber stamp for management.

Those include shrinking the size of the board to 11 from 17 as of January, appointing more members with business experience and bringing more independent directors.

Gold and Disney have dismissed the reforms as an effort to muzzle critics like themselves. The pair said they plan to educate institutional shareholders about the company’s performance and leadership.

They declined to comment on the board meeting, but in an interview Monday they predicted that the company would attempt to dismiss them as rabble-rousers.

Chief Financial Officer Tom Staggs, meanwhile, has been talking with analysts and investors to gauge their reaction to the resignations and assure investors that the company has a handle on its challenges.

Disney has struggled with poor ratings at ABC, weak theme park attendance and delicate negotiations with its longtime partner Pixar Animation Studios.

For their part, Disney and Gold are mapping a strategy that will continue to give them high visibility in their war of words with the company.

“What we’re doing for the moment is reviewing and assessing the hundreds of e-mails, phone calls and letters that have been pouring into the office since Roy announced his resignation,” said Clifford Miller, managing director of Roy Disney’s investment firm, Shamrock Holdings.

Gold and Disney could face an uphill battle given the company’s improved outlook this year, analysts and investors said.

“Quite frankly, the stock’s done very well for institutional investors this year,” said Janna Sampson, a portfolio manager at OakBrook Investments near Chicago, which holds 540,500 Disney shares. “This was probably needed 18 months ago.”

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Times staff writers Walter Hamilton and Joseph Menn contributed to this report.