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Roy Disney resigns from Disney Co. board
( 2003-12-01 17:01) (Agencies)

Disney vice chairman Roy E. Disney has resigned from the media conglomerate's board, reportedly calling on chief executive and chairman Michael Eisner to also step down.

Disney's resignation may be a pre-emptive move to avoid being forced off the board of The Walt Disney Co. The board's governance and nominating committee has decided not to recommend Disney for another term because he is over the mandated retirement age of 72, the company said Sunday.

The full board is scheduled to meet Monday and Tuesday in New York; board membership is on the meeting agenda.

Disney, the nephew of company co-founder Walt Disney, has been increasingly critical of Eisner's leadership and has called for Eisner's resignation before, a move that was rejected by the board.

Disney is the last family member to be active in the company. He previously resigned from the board in 1984 to launch a stock battle for the company, which was then headed by Ron Miller, Walt's son-in-law.

Disney and Stanley Gold, who runs Disney's investments from a company called Shamrock Holdings, were instrumental in preventing a hostile takeover and installing Eisner and Frank Wells to run the business.

Gold remains on Disney's board. Wells died in a 1994 helicopter crash.

Disney's plan to resign from the board was first reported in The Wall Street Journal, which said the 73-year-old sent a scathing three-page letter to Eisner on Sunday, criticizing his leadership over the past seven years. Eisner, 61, has held the top post since 1984.

"It is my sincere belief that it is you that should be leaving and not me," Disney wrote, according to a text of the letter obtained by the Journal.

Disney accused Eisner of "muzzling" his voice on the board, although he did offer some praise.

"Michael, I believe your conduct has resulted from my clear and unambiguous statements to you and the Board of Directors that after 19 years at the helm, you are no longer the best person to run the Walt Disney Company," Disney wrote.

A call to Disney on Sunday was not immediately returned.

Former U.S. Sen. George Mitchell, the board's presiding director, issued a statement Sunday regretting Disney's actions.

"The Governance and Nominating Committee recently informed Mr. Disney of its judgment that the mandatory age limits of the company's Corporate Governance Guidelines, which had previously been unanimously approved by the Board, should be applied to him and two other Board members, Thomas S. Murphy and Raymond Watson," Mitchell said.

"It is unfortunate that the Committee's judgment to apply these unanimously adopted governance rules has become an occasion to raise again criticisms of the direction of the Company, and calls for change of management, that have been previously rejected by the Board."

Watson and Murphy were considered Eisner allies, while Gold, who will remain on the board, is an Eisner critic.

Eisner is credited with building the company from a minor maker of mediocre films and proprietor of two theme parks in 1984 into a media giant that includes five theme parks around the world, the ABC Television network, the ESPN sports cable channel and one of the highest-grossing movie studios.

But he has been severely criticized for a series of blunders since 1994, which include the paying of a multimillion-dollar severance to Michael Ovitz after serving less than two years as Disney president; the clumsy firing of former studio chief Jeffrey Katzenberg and the severe decline in ABC's ratings.

Disney's letter blames Eisner for a loss of morale at the company and for causing a perception that "the Company is rapacious, soul-less, and always looking for the 'quick buck' rather than the long-term value which is leading to a loss of public trust."

He also blasts Eisner for the failure to maintain constructive relationships with business partners, including Pixar Animation Studios, which co-produces computer-animated films with Disney, including the record-breaking "Finding Nemo."

Eisner has been criticized for micromanaging the company and presiding over a "brain drain." Top executives who have left the company over the past 10 years include Katzenberg, Steven Bollenbach, who now heads the Hilton Corp., and most recently Paul Pressler, who left last year to head Gap Inc.

Disney has often called itself a "farm team" that nurtures talented executives, some of whom who leave to run their own companies.

Disney's stock has fallen from more than $40 per share in 2000 to under $14 in 2002. The stock has risen nearly 34 percent since the beginning of the year as the company's fortunes have gradually improved.

Disney shares closed at $23.09 at the end of trading Friday on the New York Stock Exchange.

In September, 2002, after months of often bitter infighting among board members about the company's declining fortunes, the board unanimously approved Eisner's plan for improvement, which included the most drastic changes in board membership since Eisner became chairman.

One of the changes included bringing more independent members to the board, which had long been criticized for having a too cozy relationship with Eisner.

Since then, another vocal Eisner critic, Andrea Van de Kamp, was dropped from the board.

The two other board members who will not be re-nominated due to the age limit are 76-year-old Watson and Murphy, 77.

Watson is one of the board's longest-serving members. As vice chairman of The Irvine Co., a large California builder, Watson was an adviser to Walt Disney on the design of Epcot Center and has been on the board since at least 1984.

Murphy served as chairman and chief executive of Capital Cities/ABC until Disney bought the company in 1995.

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