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Disney Chairman Isn't in the Happiest Place

September 17, 2004|Richard Verrier | Times Staff Writer

George J. Mitchell has privately complained to friends for months about the demands of being Walt Disney Co. chairman.

He didn't want the position. Even in the best of times, the board chairmanship of such an enormous entertainment conglomerate requires long hours and thick skin. He was pushed into the job -- and the spotlight -- after a shareholder revolt last March prompted the board of directors to strip Chief Executive Michael Eisner of his chairmanship. From Day One, it was a job that would try even a diplomat's patience.

Last week it got even harder. With Eisner's announcement that he will retire in 2006, Mitchell must not only help restore stability to a company rocked by controversy but also lead the high-profile search for a new CEO. Along the way, the former U.S. senator and veteran peacemaker is sure to be tested by dissatisfied investors, dissident former board members and, some believe, by Eisner himself.

Mitchell is used to quelling tensions. He is, after all, the man President Clinton once sent to calm the waters in Northern Ireland. But rarely has the popular Maine Democrat, who once was reelected to the Senate with 81% of the vote, found himself accused of being part of the problem, not the solution. Mitchell was stung when the same shareholders who rose up against Eisner also slapped him with a 24% no-confidence vote.

Now the 71-year-old lawyer is faced with a responsibility that could enhance -- or tarnish -- his carefully polished image in both the corporate and political worlds.

"He's got everything to lose and nothing to win," said one longtime Mitchell associate, who spoke on the condition that he not be named. Mitchell is no quitter, the associate said, but "he wants out as soon as he can. It's a totally thankless job."

Mitchell, whose annual compensation package is valued at $500,000, says he can handle it.

"I served for six years as U.S. Senate majority leader. Managing multiple responsibilities isn't a new thing for me," he said Thursday. "I expected [the chairmanship] to be challenging. And it has been."

Among the hard realities he faces is that potential candidates for Eisner's job aren't beating a path to Disney's door, suggesting that an executive search could be a drawn-out affair. Many on the short list of possible successors, including News Corp.'s Peter Chernin and Yahoo Inc.'s Terry Semel, are happy where they are. Some, such as EBay CEO Meg Whitman, have gone out of their way to make clear they have no interest in leading Disney.

The search for an heir to the Disney throne also could put a strain on Mitchell's relationship with Eisner. The two men have forged a close alliance since Mitchell joined the Disney board in 1995, and Mitchell went to bat for Eisner this year, lobbying pension funds and publicly supporting Disney management in the face of a hostile takeover bid by cable giant Comcast Corp.

But Eisner's decision to back an internal candidate -- Disney President Robert Iger -- and his repeated suggestion that he might once again become board chairman have put pressure on Mitchell to establish himself as a more independent voice. The selection of Iger by the board could only strengthen the perception that Mitchell is doing Eisner's bidding.

"For Mitchell this is one of those acid tests," said Charles Elson, a corporate governance expert at the University of Delaware. "To date he's been a very strong supporter of Eisner. Now he's at a fork in the road, and which road he takes will have a huge impact on how investors view him."

On Thursday, Mitchell stressed that Eisner would have no more influence in the selection of his successor than any other board member. "We will listen to and consider his view. But in the end, the decision will be made by the full board," he said. "We have one standard and one standard only: what's best for the company and the shareholders."

Increasingly, some believe Mitchell has the upper hand over Eisner. Mitchell has presided over reforms that overhauled the Disney board, shrinking its size and increasing the number of independent directors. At one point, Disney's directors included Eisner's personal lawyer, his architect and the principal of the elementary school once attended by his children. That is no longer the case.

Yet Eisner can't be counted out. He retains considerable clout among board members, especially since the resurgence of Disney's stock price this year and the rekindled growth in the Burbank-based company's theme parks.

Mitchell, the father of two young children with his second wife, acknowledged he thought hard before undertaking "a major initiative in my life" when his board colleagues pressed him into action. And indeed, he said, since he became chairman in March, the amount of time he has devoted has been "the equivalent of a full-time job."

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