December 23, 2004

I'm Not Going To DisneyWorld

We recently heard one of our good friends tell us that, if he ever won it big, he's taking the family to DisneyWorld (just like in the commercials). Then, the other day, we managed to read an article saying that Disney has been charged by the SEC for failing to disclose relationships between the company and its directors. Like, for example:

- failure to disclose between 1999 and 2001 that it employed three children of directors who were paid annually from $60,000 to $150,000;

- a 50 percent-owned subsidiary employed the spouse of another director and that the spouse was paid more than $1 million per year;

- Disney failed to tell investors it paid a company owned by a Disney director that provided air transportation to that director for Disney business;

- the company also failed to disclose that it provided office space and other services valued at more than $200,000 annually to another Disney director.

"Shareholders have a significant interest in information regarding relationships between the company and its directors," said SEC Deputy Enforcement Director Linda Thomsen.

"Failure to comply with the SEC's disclosure rules in this area impedes shareholders' ability to evaluate the objectivity and independence of directors," she said in a statement.

Hmmmm. How could the average shareholder evaluate the objectivity and independence of a company's directors? Well, objectivity would be so... subjective. And since we are well aware that we are considered to be quite subjective in our opinions, we're reasonably certain that we couldn't put an unbiased discussion together about that.

But independence, now - we think we can handle that one a bit. In fact, we think it would be a good idea to show you, dear reader, how independent all of these directors are. After all, each director gets paid more than an average employee in the company for occupying their seat on the board. They have to show up at least once every other month to attend a board meeting to collect that salary. Oh, yeah - they also have to make policy decisions that affect the entire company. So it might be considered a strain on their independence if they were, say, to belong to another board of directors (or be another company's CEO or something like that). Especially if they were competitors, or potentially could work together

So, let's take a quick look at the board of directors of Disney, shall we? We're just going to point out any other connections these board members might have with another company. You know, those connections which might influence the objectivity and independence of directors.
Here's Disney's board, along with anything else they might have going these days (that we can find with very little effort online):

John E. Bryson (Director since 2000) - currently also Chairman of the Board, President and Chief Executive Officer of Edison International and Chairman of the Board of SCE, Chairman of the Board of Edison Capital (a financial investment nonutility subsidiary of Edison International) (since 2000), a director for the Boeing Corporation, and a director for Pacific American Income Shares, Inc./Western Asset Funds, Inc.

John S. Chen (Director since 2004) - currently also Chairman, Chief Executive Officer and President of Sybase, Inc.

Michael D. Eisner (Director since 1984) - currently only on Disney's board. Good for you!

Judith L. Estrin (Director since 1998 ) - currently also President and Chief Executive Officer of Packet Design, LLC, and a member of the board of directors of FedEx Corporation

Robert A. Iger (Director since 2000) - currently also a director of the Lincoln Center for the Performing Arts in New York City

Aylwin B. Lewis (Director since 2004) - currently also CEO of Kmart Corporation, and a director of Halliburton Inc.

Monica C. Lozano (Director since 2000) - currently also Publisher and Chief Executive Officer of La Opinión, the largest Spanish-language newspaper in the United States, and Senior Vice President of its parent company, ImpreMedia, LLC. In addition, she is a member of the Board of Regents of the University of California and a trustee of the University of Southern California. She is a trustee of SunAmerica Asset Management Corporation and a director of the Union Bank of California, the California Health Care Foundation and Tenet Healthcare Corporation

Robert W. Matschullat (Director since 2002) - currently also the non-executive Chairman of the Board of The Clorox Company, a consumer products company, and a director of McKesson Corporation

George J. Mitchell (Chairman of the Board since March 2004) - currently also a partner of the law firm of Piper Rudnick LLP in Washington, D.C. and senior counsel to Preti, Flaherty, Beliveau & Pachios in Portland, Maine. He is also a director of FedEx Corporation, Staples, Inc., and Starwood Hotels & Resorts

Leo J. O'Donovan, S.J. (Director since 1996) - currently only on Disney's board. Good for you!

Gary L. Wilson (Director since 1985) - currently also Chairman of the Board of Directors of Northwest Airlines Corporation, a director of CB Richard Ellis, Inc., and a member of the board of trustees of Duke University, the board of trustees of The Keck School of Medicine at the University of Southern California and the Board of Governors of the International Air Transport Association

Wouldn't it be somewhat of a conflict, if, oh, I don't know - maybe Disney was using Sybase software to run some of their computer applications? Or they used FedEx exclusively for their package deliveries? Or their 401Ks had to be bought from Pacific American Income Shares, Inc./Western Asset Funds, Inc. or SunAmerica Asset Management Corporation? What if the company uses Mr. Mitchell's legal firm to handle all of its legal business? What if the only cruise packages you can get from Disney Cruise Lines require you to fly Northwest?

Just another story for the Media Whores to ignore. Again. It's too bad that the closest thing we get to journalism these days is a bit of research done by bloggers in their spare time...

Posted by (: Tom :) at December 23, 2004 06:01 AM