The fog of war…

January 28, 2004

Former Disney (DIS) directors Roy Disney and Stanley Gold may have declared war with Disney on their website SaveDisney.com which asks Disney shareholders to vote no on re-electing Chariman Michael Eisner and three other Disney directors up for re-election. But Disney’s proxy filed yesterday shows that there’s still a relationship between the two former directors, who resigned in November, and the Mouse. The proxy notes that in fiscal 2003 through Jan. 13, 2004, the company has paid $444,752 in legal fees to a law firm that is representing Mssrs. Disney and Gold. According to the proxy, the fees are related to the defense of shareholder lawsuits stemming from the tenure of former Disney president Michael Ovitz as well as an ongoing SEC investigation of the company’s failure to disclose certain related party transactions. Among those were the company’s payments to Roy Disney for use of his airline, Air Shamrock, for business purposes, and the employment of Stanley Gold’s adult daughter. In the proxy, Disney noted that it was close to settling the SEC matter. The company disclosed the airline deal for the first time in its 2002 10-K, though presumably it was in place before that. Perhaps because the deal was subject to additional scrutiny, the company substantially reduced its payments to Air Shamrock in fiscal 2003 to $162,000, compared with $623,782 in fiscal 2002.

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