Disney's ( DIS) board of directors said Tuesday it expects to name a successor to CEO Michael Eisner by next June.The board indicated that Disney operating chief Bob Iger was the sole internal candidate for the post, though directors said a search for a successor would include "full consideration" of external candidates as well. Disney Chairman George Mitchell plans to depart by the company's 2006 annual meeting at the latest, according to the board. After a new CEO is named, the board said, it will engage in "thorough, careful and reasoned review and will then select and announce a successor chairman." The board's announcement would appear to have no cushioning effect on the collision course between Disney and the disgruntled former directors Roy Disney and Stanley Gold. In an open letter delivered to Disney's board last week, the ex-directors said that if Eisner didn't depart upon the completion of an immediate CEO search -- which the ex-directors said Disney should complete by next year's annual meeting -- the two former directors would propose "an alternate slate of directors committed to moving the Company forward aggressively." It has been rumored that Eisner is a candidate to succeed Mitchell as chairman -- a possibility that Roy Disney and Gold condemn. Eisner, however, recently told Fortune magazine that he hasn't asked to stay on the board, or become chairman, once his current contract ends in September 2006. A representative of the former directors indicated they would have no immediate comment Tuesday evening. In other news stemming from a regularly scheduled meeting of Disney's board, the board's compensation committee said it had approved a redesigned incentive bonus program for management "to further clarify and formalize the company's practice of linking executive compensation and performance." Under the new program, which takes effect for Disney's 2005 fiscal year starting Oct. 1, 70% of bonuses for corporate managment, including the most senior executives, will be based on performance against specific measures established at the beginning of the year. In 2005, those measures will include operating income, after-tax free cash flow and earnings per share.
The most senior corporate executives' bonus also will be adjusted up or down as much as 20% depending on how Disney's EPS performance compares with that of the S&P 500. Continuing its show of support for Disney's current leaders, the board said it "reaffirmed its strong support for Michael Eisner, Bob Iger and the entire management team." In noting that Bob Iger is "the one internal candidate," the board said, "He is an outstanding executive and the Board regards him as highly qualified for the position." The company hopes to announce a successor to Eisner "as soon as possible," the board said. Disney shares rose 28 cents Tuesday to $23.41.