Novice Disney Board Member to Be Chairman

John E. Pepper Jr., 67, one of Disney's newest outside directors, will take over the position on Jan. 1 from retiring Chairman George J. Mitchell, the former Senate majority leader. Disney Chief Executive Robert A. Iger in a statement said Pepper "has quickly immersed himself in our business" since joining the board of the Burbank-based entertainment giant in January.

Shareholder groups praised the move. Mitchell had long been criticized for being too close to former Disney CEO Michael D. Eisner, who retired last year. Mitchell assumed the chairman's post during a crisis in March 2004, when directors stripped Eisner of the job following a contentious annual meeting in which Eisner received an embarrassing 45% no-confidence vote from investors.

"Eisner's era was over anyway, but this puts an exclamation point on it," said Patrick McGurn, executive vice president of proxy advisor Institutional Shareholder Services Inc.

Disney's board for years was criticized for lacking business experience and having personal ties to Eisner. At one time, its directors included Eisner's personal lawyer, his architect and the principal of the elementary school his kids attended. Business Week named Disney's board the worst in America for two years running, in 1999 and 2000.

"The only reason we gave Disney an `F' in corporate governance," said Nell Minow of Corporate Library, a shareholder rights advocate, "is because there wasn't a lower grade we could give."

Responding to shareholder pressure, Disney in Eisner's final years as CEO began a revamping that eventually earned the company praise from corporate governance experts.

All but three of Disney's 14 directors are now classified as independent. Disney also has separated the job of chairman from that of chief executive, turning it into a non-executive position.

Mitchell had planned to leave the board earlier this year. But he was asked in December to delay his departure so a successor could be found, even though he had reached the mandatory retirement age of 72.

Other directors had expressed interest in the post, but the same length of tenure that they felt made them strong candidates would have troubled some investors.