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Case from journal
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Reference no. JIACS13-01-03
Published by: Allied Business Academies
Published in: "Journal of the International Academy for Case Studies", 2007
Length: 14 pages
Data source: Published sources

Abstract

This case discusses the corporate governance practices at The Walt Disney Company. It discusses the company’s governance issues and mechanisms prior to the breakout of scandalous activity in corporate America, which began with the crisis at Enron in 2001. We discuss the years that immediately followed, with particular attention to the changes in the governance landscape – that is, the new expectations imposed on US businesses, either voluntarily or by federal legislation or stock exchange regulation. Among the topics discussed are board independence and board size, fees for services, succession planning, diversity, entrenchment, and CEO duality. We then address the steps that The Walt Disney Company has taken towards complying with these new rules, not only to highlight how far the company has come but also to show how much more needs to be done in order to restore investor confidence and corporate reputation. In a separate case in this issue, we discuss the conflicts that arose among the company’s CEO and two of its board members, which may have contributed significantly to negative perceptions regarding Disney’s governance practices. The primary subject matter of this case is corporate governance, and The Walt Disney Company is used as an example of the strengths and weaknesses that can be found in governance systems. Secondary issues examined include CEO role duality, board independence, entrenchment, and succession planning. The case has a difficulty level of four and is most appropriate for undergraduate or graduate-level business education, either in strategic management or leadership. It is designed to be taught in 1 and a half class hours and is expected to require 1-2 hours of outside preparation. Specifically, students should first become familiar with the federally-legislated Sarbanes-Oxley Act of 2002 and would be well-served to read the case titled Michael Eisner and his Reign at Disney, which can be found in this issue. The case here seeks to demonstrate that what appears to be strong governance may in fact be a facade, by elucidating the subtle components of corporate governance that can slip under the radar but which are crucial if governance is to be effective. When is meeting the letter of the law enough, and how is that determined by shareholders?
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Abstract

This case discusses the corporate governance practices at The Walt Disney Company. It discusses the company’s governance issues and mechanisms prior to the breakout of scandalous activity in corporate America, which began with the crisis at Enron in 2001. We discuss the years that immediately followed, with particular attention to the changes in the governance landscape – that is, the new expectations imposed on US businesses, either voluntarily or by federal legislation or stock exchange regulation. Among the topics discussed are board independence and board size, fees for services, succession planning, diversity, entrenchment, and CEO duality. We then address the steps that The Walt Disney Company has taken towards complying with these new rules, not only to highlight how far the company has come but also to show how much more needs to be done in order to restore investor confidence and corporate reputation. In a separate case in this issue, we discuss the conflicts that arose among the company’s CEO and two of its board members, which may have contributed significantly to negative perceptions regarding Disney’s governance practices. The primary subject matter of this case is corporate governance, and The Walt Disney Company is used as an example of the strengths and weaknesses that can be found in governance systems. Secondary issues examined include CEO role duality, board independence, entrenchment, and succession planning. The case has a difficulty level of four and is most appropriate for undergraduate or graduate-level business education, either in strategic management or leadership. It is designed to be taught in 1 and a half class hours and is expected to require 1-2 hours of outside preparation. Specifically, students should first become familiar with the federally-legislated Sarbanes-Oxley Act of 2002 and would be well-served to read the case titled Michael Eisner and his Reign at Disney, which can be found in this issue. The case here seeks to demonstrate that what appears to be strong governance may in fact be a facade, by elucidating the subtle components of corporate governance that can slip under the radar but which are crucial if governance is to be effective. When is meeting the letter of the law enough, and how is that determined by shareholders?

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