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updated 2/12/2004 2:13:31 PM ET 2004-02-12T19:13:31

The battle between Walt Disney, the company, and Roy Disney, the man, continues to rage as Roy Disney, fired off a counter-charge to the letter in defense of Chief Executive Michael Eisner signed by the board of directors and released yesterday.

Roy Disney, who resigned from the board in December 2003 and is the nephew of company founder Walt, wrote: "It appears that the Board continues to resist independent, thoughtful consideration of opinions raised in opposition to Michael Eisner." The letter, which is also signed by Stanley Gold, former director and Roy Disney ally, refutes some of the charges in the board's letter, it claims, for instance, that whatever the recent gains in Disney's share price,"[T]he company's operating income is only back to slightly more than 1994 levels."

In 1994, Disney's operating income was approximately $3.1 billion, accounting pro-forma for Capital Cities/ABC acquisition of that year, the letter says. Disney's operating income in fiscal year 2003 was approximately $3.2 billion. Thus there has been almost nothing added to the bottom line "and this is after reinvesting $25 billion in the Company during that period," the letter continues.

Yesterday, the Disney board issued a letter to shareholders accusing the dissident former directors of waging a "misleading and distorted campaign" against the company and "putting their own interests ahead of yours."

Roy Disney and Gold's response says: "Although we could very easily refute your letter point-by-point, we will not do so. Rather, we will just highlight a few of the letter's misleading facts and distortions." It concludes by asking, What has Eisner done lately?: "No one ignores Michael's successes from 1984 to 1994 ... The problem is, following the death of Frank Wells in 1994, the Company's performance has been substandard. How long can Michael Eisner live on the Company's accomplishments from 1984 to 1994?"

As to the allegations of self-interest: "We could go on but suffice it to say it is not we who are trying to protect executive positions or board seats. As we have repeatedly stated, neither of us desire to be the Chairman or CEO of the Company; our concern is solely the interests of the shareholders and the integrity and future of The Walt Disney Co."

The board's letter pointed to what it called "a real turnaround for Disney, as [it] began to emerge from the effects of a worldwide economic slowdown and the downturn in the global travel and tourism industry caused by terrorist attacks and war." It went on to accuse the dissidents of hypocrisy in attacking management decisions they once backed as board members and with sour grapes as they lost board positions as a result of Disney's changes in its corporate governance.

Who you like in the Disney fight is partly a matter of perspective. Over the last year, the share price has rallied. But over the past five years, it has fallen and has trailed the S&P 500 as well as rival media conglomerates Viacom, News Corp. and Sony. Its shares have fared better than Time Warner's , though.

Nearing his 20th anniversary at the helm of the Mouse House, Eisner has been taking a more routine CEO pay package recently; however, his average pay over the years remains off the charts, owing to the more than half a billion dollars he gained from stock options in 1999. As a result, he is a rare member of the Forbes 400 who gained his place among the richest Americans without founding or being a substantial investor in the source of his wealth.

Disney has changed its governance rules to allow for a more independent board, but critics say the net effect was to solidify Eisner's control, not to subject him to dissent. He is, of course, getting plenty of dissent now. Efforts to reach the company for a comment on Roy Disney's most recent letter were unsuccessful.

Disney and Gold have in the recent past accused Eisner of losing "sight of the vision upon which this Company was founded," which was "the desire to make the world a more magical place." Eisner, they say, "has shifted to the chase for the quick buck instead of a dedication to new and high-quality ideas, the development of enduring value. This has led to division within the Disney workforce, a revolving door of managers and the exodus of too many of our most creative and inspired employees."

This charge is vaguer and harder, if not impossible, to rebut, though the board does say it is committed to "nurturing and further developing the wonderful creativity and magic that is at the heart of The Walt Disney Co."

Disney and Gold haven't proposed an alternate slate of directors. They have urged shareholders to vote against Eisner, but the stock is widely held and the CEO's job does not seem in peril. But the dissidents, it seems, have gotten Eisner's attention.

© 2012 Forbes.com

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