How much influence do stockholders wield over decisions made by and about the board of directors? Many stockholders of Walt Disney have been pushing for more say in key corporate governance issues such as how the board of directors is chosen and how corporate officers are supervised. Little by little, their voices have been heard. Disney has made a number of changes to the way directors are elected, reduced the size of its board, increased the number of independent members, and separated the role of chairman of the board from the role of chief executive officer.
Stockholders were looking forward to new leadership and new ideas when Michael Eisner was named CEO of Disney in the mid- 1980s. The company’s earnings were down, and its movies weren’t drawing the huge audiences that management had hoped for. Eisner and his management team supercharged the theme park business, brought the company into the television industry by buying Cap Cities ABC, and put the magic back into Disney movies.

1. Generally, stockholders of a large corporation such as Disney are fairly complacent with existing management. And yet, these same stockholders eventually changed the way that Disney was managed. In this case, what actions provoked stockholders to become so vocal?
2. After Michael Eisner received such a high percentage of “withhold” votes, do you think the Disney board should have taken additional steps beyond taking away his chairmanship title?
3. Do you agree with the Disney board’s decision to meet with the managers of large pension funds that own sizable blocks of Disney stock? Why or why not?
4. Why is it important for a board to have a certain number of directors who are not corporate officers and have no personal connection with corporate officers? What can board members who are outside the corporation contribute to the overall management of a large corporation?