dissidents are back to their old tricks.
Former Disney board members Roy E. Disney and Stanley P. Gold sued Monday to void the election of CEO-elect Robert Iger. The suit says the board misled shareholders about Disney's efforts to find a successor to Michael Eisner, who is due to step down in September.
The suit reopens an old wound at Disney, which said two months ago that Iger would succeed Eisner. Gold and Disney's suit, filed in Delaware, also names Iger, Eisner and other directors as defendants. The move comes two days before the Burbank, Calif., media company is due to post quarterly earnings.
Disney issued a one-sentence statement brushing off the allegations. "The record of strong performance of The Walt Disney Company speaks for itself, and this frivolous and baseless lawsuit reflects the mean-spirited, self-serving interest of two ex-board members," Disney said.
Still, Disney and Gold's suit could stir up more rancor over the company's handling of its CEO succession plans. It was the question of who would succeed Eisner -- and when -- that nearly resulted in the board's toppling at a contentious 2004 annual meeting.
At that meeting, shareholders handed Eisner and his board a no-confidence vote, prompting the board to name director George Mitchell nonexecutive chairman. When Eisner announced last fall that he would leave his CEO spot a year early, critics like Gold and Disney were pleased.
But if Eisner's departure pleased some critics, Iger's appointment reignited the firestorm.
"We find it incomprehensible that the board of directors of Disney failed to find a single external candidate interested in the job and thus handed Bob Iger the job by default," Disney and Gold said in a statement following the announcement of Iger's election.
Disney and Gold were two of the leading critics of Eisner's imperial reign as CEO. They and several others said that considering the company's apparent creative shortfalls toward the end of Eisner's two-decade-long reign, it made sense for Disney's new leader to be an outsider.
The dissidents claim the Disney board made false claims to shareholders during its CEO search in an effort to win votes for the incumbent board at the 2005 meeting.
A statement posted on Gold and Disney's Web site,
savedisney.com, claims Iger, Eisner and other board members engaged in fraud and breach of disclosure in the search for an Eisner replacement.
The complaint suggests that the fix was in from the start, saying that "the board interviewed only one external candidate, delayed notifying her of any decision and did little to dissuade her from withdrawing her candidacy." That's a reference to
CEO Meg Whitman, who was briefly a candidate for the job. Whitman last month joined the
board at the behest of chief Jeffrey Katzenberg.
Disney has answered those claims before, however. At the time of Iger's selection, Mitchell said the search was "lengthy, thorough and professional ... comparing both internal and external candidates against our criteria for CEO."
The suit also criticizes Eisner's presence at interview sessions for external candidates and the board's apparent failure to look into the Fox Family Channel acquisition. The suit claims that information was withheld from the board regarding the writedown of certain Fox Family assets.
Disney bought Fox Family from Haim Saban and News Corp. in 2001 for a whopping $5.3 billion in what was a roundly criticized deal.
Disney rose 17 cents Monday to $27.06.