The succession struggle at Disney, bookended between the indictment of Bernie Ebbers and the conviction of Martha Stewart, has generated plenty of talk of shareholder activism and democracy. While lessons can be learned about governance among communications companies, one must be careful to take away the right lessons.
Majority opinion in the Michael Eisner case suggests that it's about time shareholders play a more active role in direct corporate governance. Even if its implies occasional micromanagement, shareholders' exertion of demands can ensure that neither CEOs' salaries nor their egos become overinflated.
But one independent business writer has suggested in a New York Times op-ed piece that too much shareholder democracy might not lead to optimum results. Nina Munk, in a piece published March 5, said that shareholders are best off expressing democracy by selling or acquiring stock. Effectively, it was a warning that only those who agree with management should stick around for the ride.
Before we dismiss Munk's argument as elitist,it's useful to point out a case or two where it holds water. For starters, if so many people thought Eisner was ineffective, why weren't they driving down share prices continually at Disney? Munk makes a case for the importance of walking the talk.
When push finally came to shove on the Disney board, any board member deemed by Roy Disney to be a friend of Eisner, including former Sen. George Mitchell and former Cisco chief technology officer Judy Estrin, fell victim to a shareholder vote to withhold confidence. I'm a confirmed Eisner hater myself, but when people with as much personal integrity as Estrin and Mitchell are tarred with the brush of not being mean enough to Mike, I start to wonder about the precision of this weapon called shareholder democracy.
On March 10, the California Public Employees' Retirement System made a similar decision to withhold support for five directors from Hewlett-Packard, to express displeasure at the way the board awarded auditor contracts.
Sometimes a charge at the barricades conjures memories of Robespierre and the Jacobins. Not every CEO in the United States deserves to be beheaded.
Loring Wirbel is Communications editorial director for EE Times and its network publications.