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James Stewart doesn’t think that Michael Eisner is a nice man. That much is clear from DisneyWar, Stewart’s exhaustingly detailed account of Eisner’s two-decade reign as CEO of The Walt Disney Co. According to Stewart, the Magic Kingdom’s monarch is a duplicitous, lying backstabber. DisneyWar chronicles the underhanded ways in which Eisner treated Jeffrey Katzenberg and Michael Ovitz, his former friends and fellow executives. Stewart catches Eisner in various small fibs, including stories about visiting Walt Disney’s grave (the company patriarch was cremated). The fact that Eisner seems to have suffered few disadvantages in his life — he grew up as a child of wealth and privilege — makes his boorishness even more disagreeable. But do Eisner’s personal faults make him a bad CEO? Certainly not compared to the likes of Kenneth Lay, L. Dennis Kozlowski and Bernard Ebbers, who have radically redefined what it means to be a poor corporate chieftain. Eisner can argue that Disney has done far more than stay out of bankruptcy or prosecution under his watch — it has grown exponentially. Since he took the reins of the entertainment conglomerate in 1984, Disney’s market value has soared from $1.8 billion to $57 billion. Stewart briefly concedes that compared to the many high-profile corporate flameouts of recent years, “Eisner and Disney [seem] like pillars of ethical and prudent behavior.” Though Stewart’s case against Eisner ultimately feels like overkill, DisneyWar is a frequently compelling read. Stewart is a masterful journalist with a track record spanning seven nonfiction books and a Pulitzer Prize that he earned at The Wall Street Journal. (Earlier in his career, Stewart was a reporter at The American Lawyer, a sibling publication of Corporate Counsel.) Stewart isn’t a literary stylist, compared to other well-known nonfiction authors like Michael Lewis, but he writes with admirable clarity and restraint. DisneyWar also features another Stewart hallmark — meticulous reporting. Backed by unparalleled access to sources (including Eisner, who initially cooperated with the author), Stewart captures an amazing level of behind-the-scenes detail. Not everyone will want to know about the battle over which songs to cut from “The Little Mermaid,” the panic created by Johnny Depp’s mascara in “Pirates of the Caribbean,” or the contract demands of Hilary Duff and her stage mother. But Stewart covers all of this, and more. In fact, DisneyWar would be an even better book if its author hadn’t crammed so much in. The vast scope makes it a test of stamina for the reader. Compared to a nonfiction business classic like “Barbarians at the Gate” — which derives momentum from sticking to the events of a few months — DisneyWar’s sprawling time frame drags it down. And despite Stewart’s extensive research, he’s frustratingly lax in identifying his sources. He liberally re-creates scenes and dialogue as if he (or a tape recorder) had been present, but he almost never indicates where he got the information. This is a common technique for authors of nonfiction books and magazine features (I occasionally use it myself). Still, more information about DisneyWar’s sources would have been welcome. While Stewart makes much of Eisner’s personal flaws, the author’s criticisms seem most appropriate when he focuses on the CEO’s domination of Disney’s board. In this post-SOX era — when directors are expected to vigilantly monitor and, if necessary, challenge management — DisneyWar delivers a strong warning about the perils of a lapdog board. Indeed, given the shareholder suit that Disney’s directors are currently battling in Delaware state court, they might wish they’d been a bit less complaisant. (Disney shareholders argue that the board breached its fiduciary duties by approving Eisner’s demand for a $140 million severance package for Ovitz, who left the company after just 14 months as president.) Stewart shows how Eisner squelched dissent on the board and “ruthlessly dispatched anyone who dared challenge him.” The most vivid board-related incident involves Andrea Van de Kamp, a prominent Los Angeles cultural and social figure and the wife of a former California governor. She was one of the few directors who sided with Eisner’s only vocal adversaries on the then 18-person board: Roy Disney, the nephew of Walt Disney, and Stanley Gold, who is Roy Disney’s financial adviser. Together, the trio argued that the company needed new leadership to revitalize it after years of sagging performance. They also objected to Eisner’s heavy-handed manipulation of the board. Stewart — as usual, silent on his sourcing — describes how Eisner managed to boot Van de Kamp from the board at a January 28, 2003, meeting. Her term was about to expire, and Eisner wanted to keep her off the slate of directors that would be presented to shareholders at the company’s next annual meeting. The day started with the board’s nominating committee refusing, at Eisner’s request, to include Van de Kamp on the slate. Later that day, at a full board meeting, Gold moved to reinstate Van de Kamp to the list of director nominees. Van de Kamp argued her case, maintaining that she was being punished for being too independent. But her pleas went nowhere. The board kicked her off by a 12 to 4 vote, with two abstentions. The only other director to support Van de Kamp, besides Roy Disney and Gold, was Reveta Bowers, the principal at a Los Angeles private school. Stewart describes how, when it came time for the board to vote, Bowers started to raise her hand in favor of keeping Van de Kamp on the list. Eisner glowered at Bowers, and she lowered her hand. But then she defiantly raised it. Another director, the actor Sydney Poitier, looked as though he would also support Van de Kamp, but he kept his hand down after seeing how Eisner glared at Bowers. He abstained. Stewart calls the Eisner-directed expulsion of Van de Kamp “a symbolic execution in which other board members sat passively by.” Bowers, Gold, and Roy Disney were later forced off the board too. And where were the lawyers in the board’s deliberations? Stewart never makes it clear who, if anyone, was giving legal advice to the directors. Disney’s current general counsel, Alan Braverman (a former Wilmer, Cutler & Pickering partner who assumed the job in 2003), and the prior GC, Louis Meisinger, get glancing attention and are not mentioned at all in connection with board matters. (Meisinger is now a senior adviser at Sheppard, Mullin, Richter & Hampton.) Stewart briefly mentions the roles played by outside counsel Ira Millstein and Martin Lipton, but doesn’t critique their performance. In June 2002 Eisner hired Millstein, a partner at Weil, Gotshal & Manges, to help draft governance reforms. (Stewart makes it sound as if Millstein was working for Eisner, not the board.) But the exact scope of Millstein’s role is murky. He apparently drafted guidelines that would have trimmed the board’s size and prevented “nonindependent” directors from sitting on important committees, but those rules were followed erratically. Stewart observes that while Millstein generally advises companies to split the CEO and chairman jobs, the corporate governance guru said Disney didn’t need to do this until Eisner retired. Lipton, of Wachtell, Lipton, Rosen & Katz, makes a fleeting cameo in DisneyWar when he advises the board shortly before the 2004 annual meeting that it should split the two positions. Lawyer-turned-executive Sanford Litvack falls under a harsher light. But as with Eisner, Stewart seems to have an unfavorable opinion of Litvack primarily because he isn’t a nice person. A former partner at the New York law firms of Donovan Leisure (now defunct) and Dewey Ballantine, Litvack joined Disney as an in-house lawyer and rose to become senior executive vice president, and briefly, vice-chairman. Litvack aspired to the president’s job, but was denied it by Eisner. Stewart keenly observes: “Perhaps serving as Eisner’s hatchet man had earned Litvack Michael Eisner’s contempt as much as his gratitude.” Litvack left Disney at the end of 1999, and is currently a partner at Hogan & Hartson. Since the publication of Stewart’s book, Eisner has been pressured to resign. In March he announced he would step down as CEO and would turn over the job to Disney president Robert Iger in September. It’s not clear if DisneyWar played any role in Eisner’s decision. He’s departing under a cloud of criticism that he hung on to power too long. But unlike other recently disgraced executives, at least Eisner’s wrists are free of handcuffs. Susan Beck is a senior writer for The American Lawyer, a sibling publication of Corporate Counsel.

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