Michael Eisner is planning to go away, and investors are happy.
Eisner announced that he would step down as chief executive of the Walt Disney Co on Sept. 30, 2006, at the end of his current contract and after 22 years in the job. Some investors responded that it was not soon enough, but Disney's shares rose on the news, increasing US$0.30, to US$23.16.
PHOTO: AFP
On the surface, that reaction was odd. Few chief executives have done better for shareholders over such a long period. An investor who bought Disney shares on the day in 1984 when Eisner took the reins, and reinvested dividends along the way, would have done nearly twice as well as one who bought the Standard & Poor's 500.
The total profit over that period -- just a few days short of 20 years -- would have been 1,869 percent, compared with a gain of 1,009 percent in the S&P 500. Put in dollar terms, an investor who put in US$10,000 would have made US$186,937 in profits, $86,005 more than the index investor.
But Wall Street can be a fickle friend, and many investors long ago decided that Eisner's successes should be credited to others, while his failures should be viewed as his alone. Executives who have left Disney in recent years have tended to be scornful of him, and his efforts to choose a No. 2 executive since the death of Disney's president, Frank Wells, in 1994 have reinforced the negative opinion.
That death, in a helicopter crash on Easter Sunday, can now be seen as the turning point in the shareholder performance of Disney. Until that day, Disney shares during the Eisner-Wells regime had a total return of 1,015 percent, compared with a gain of 267 percent for the S&P 500.
But since then, through Thursday, Disney shares had provided a total return over more than a decade of just 77 percent, less than half the 202 percent gain for the S&P 500. Disney did not do as well as the market in the late 1990s boom and also did worse in the bear market that followed the bursting of the technology bubble in 2000.
Disney shares did outperform the market in 2003, gaining 44 percent, but that has done nothing to quiet Eisner's critics.
What went wrong? Theme park attendance has not risen as much as had been hoped, hit movies have been hard to find recently and some expensive acquisitions have not worked out well.
In retrospect, the easy profits had come from revitalizing the Disney brand and making a lot of money from selling videotapes of classic Disney animated movies.The Lion King, which revived the animation franchise, was released a few months after Wells died.
Months after that, Jeffrey Katzenberg, angry over not being tapped to succeed Wells, resigned as the head of the animation studio. He ended up suing and was paid more than US$117 million.
In 1995, Disney turned to Michael Ovitz, the Hollywood talent agent and power broker, as president. It was a disaster, and after 14 months he departed on terms -- a US$140 million buyout of his contract -- that are still being challenged in court by angry shareholders.
Disney's growth in the Eisner years has not been smooth. Its 1995 purchase of Capital Cities-ABC brought it a television network that is now struggling. Its partly owned Euro Disney subsidiary began operations in 1992 but has never lived up to expectations. A 1994 recapitalization plan did not work, and a new one this year has met resistance from some banks.
At this year's annual meeting, Roy Disney, a nephew of the company's founder, and Stanley Gold, a former director who played a role in hiring Eisner in 1984, led a proxy fight to withhold votes from him. With no other candidates on the ballot, Eisner's re-election was assured. But 45 percent of the votes were withheld from him, an embarrassment that led Disney's board to replace him as chairman, although he remained chief executive.
Disney and Gold, who both left the board last year, have said they will continue to oppose Eisner, and are expected to mount a proxy fight backing a candidate to replace him on the board at the 2005 annual meeting. His promise to step down may reduce support for the move, but it is still possible that by the time his contract expires he will no longer be a director.
That would be a sad end to the tenure of a CEO who made a lot of money for shareholders in the first decade he held the job.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique