Walt Disney Company has drawn up new rules designed to improve its corporate governance.
The initiative follows years of allegations by some shareholders that Disney’s sixteen-strong board of directors is too close to chairman/ceo Michael Eisner, plus the post-Enron desire for as much transparency as possible.
Under the new rules, directors will be forbidden to have business relationships with the media giant unless the board grants approval. The move follows criticism of payments to two members – attorney George Mitchell and architect Robert Stern – for professional services.
Disney also tried to allay fears over the independence of its board by introducing a rule defining as independent only those directors who have not worked for the firm for at least five years – a period of time critics say is not long enough to ensure objective advice.
The scheme follows a disappointing financial performance by Disney, which is suffering from a ratings slide at broadcast network ABC. However, it was not greeted with wholehearted enthusiasm by some onlookers.
“How committed is [Eisner], given that over the years his opposition to change has been so consistent?” wondered Charles Elson, head of the University of Delaware’s corporate governance unit. “Can simply stopping the [consulting] fees now change the dynamics of that board?”
Data sourced from: Financial Times; additional content by WARC staff