Walt Disney Company has always prided itself on being a family-driven corporation – a boast true in more senses than one judging by a new revelation with major implications for the media giant’s editorial board.
In a filing with the Securities and Exchange Commission, Disney declared that it has employed three offspring of its independent directors in recent years. Stanley Gold’s daughter Jennifer worked for its consumer products arm, Reveta Bowers’ son Craig worked for the group’s internet unit, and Raymond Watson’s son David worked for the Disney Channel.
The fact is significant because, amid the post-Enron demand for corporate transparency, Disney intends to adopt governance standards recommended by the New York Stock Exchange.
These state that a director cannot be counted as independent if an immediate family member (said to include an independent adult child, unlike Disney’s current guidelines) has worked for the company in the previous five years.
Disney’s sixteen-member board, often attacked for being insufficiently objective, would subsequently see its quotient of independent members fall from 13 to 10.
Moreover, the three directors in question would have to relinquish certain jobs that under Disney rules require independent status.
This may benefit under-fire chairman/ceo Michael Eisner, as Gold – a business partner of vice chairman Roy E Disney and said to be one of Eisner’s fiercest critics – would have to relinquish the post of chairman of the board’s corporate governance and nominating committee, diminishing (though in no way destroying) his influence.
However, there are also drawbacks for Eisner, who is under pressure to reverse the decline in Disney’s stock price. Watson, one of his chief supporters, would have to give up roles on the audit and compensation committees.
Such reshuffling may be the tip of the iceberg. Further upheavals of Disney’s board are expected in coming months as the group seeks to ensure its corporate governance is whiter than white.
Data sourced from: The Wall Street Journal Online; additional content by WARC staff