1. Once upon a time (as of 2000), Michael Eisner expanded Disneys corporate portfolio beyond its traditional core competencies in animated film production into a range of unrelated businesses that ranged from television production, fast food restaurants, cruise ships, and retail stores to an ice hockey team and an (American) baseball team. As a result of what was excessive diversification both Disneys competitiveness (as was measured by market share in animated films and theme parks) and profitability declined precipitously (in comparison to direct to competitors and industry averages). Nonetheless, despite Disneys troubles, Mr. Eisner took home record compensation, which led Disney shareholders to assert that the Board of Directors had failed in its fiduciary duties. Note: The biographies of Disneys Board members are listed below.

Given the information provided below analyze Disneys Board of Directors for any potential structural issues that might have been problematic. Specifically, is there anything that might compromise its independence with respect to its monitoring role?

Reveta F. Bowers Director since 1993

Mrs. Bowers, 51, has been an administrator and the Head of School for the Center for Early Education, an independent school for pre-school through sixth grade located in Los Angeles, since 1976.

Roy E. Disney Director since June 1984; also, from 1967 to March 1984

Mr. Disney, 69, has served as Head of Disneys Animation Department since 1974. Mr. Disney is a nephew of the late Walt Disney.

Ignacio E. Lozano, Jr. Director since 1981

Mr. Lozano, 73, is Chairman of Lozano Enterprises, which publishes La Opinion, the largest Spanish language newspaper in the Los Angeles metropolitan area. Mr. Lozano was Publisher and Editor of La Opinion from 1953 to 1986, except for the period from 1976 through 1977 when he was the United States Ambassador to El Salvador. Mr. Lozano acts as Chair of the Audit Committee

George J. Mitchell Director since 1995

Senator Mitchell, 66, is special counsel to the law firm of Verner, Lipfert, Bernhard, McPherson & Hand in Washington, D.C. He served as a United States Senator for fifteen years commencing in 1980. Senator Mitchell provides consulting services to Disney with respect to a variety of matters affecting the Company's international business operations and development efforts. During fiscal 1999, the Company paid Senator Mitchell an aggregate of $50,000 for these services. Senator Mitchell acts as Chair of Disneys Finance Committee

Gary L. Wilson Director since 1985

Mr. Wilson, 59, has been Chairman of the Board of Directors of Northwest Airlines Corporation since 1997, having served as Co-Chairman of the Board of Directors from 1991 to 1997 and as a director since 1989.

Judith L. Estrin Director since 1998

Ms. Estrin, 45, is Chief Technology Officer and Senior Vice President of Cisco Systems Inc., a company that develops hardware and software to link computer systems. She was formerly President and Chief Executive Officer of Precept Software, Inc., a developer of networking software of which she was co-founder, from March 1995 until its acquisition by Cisco in April 1998.

Sanford M. Litvack Director since 1995

Mr. Litvack, 63, has served as Disneys Senior Counsel (Disneys top lawyer) from April 1991 until July 2000.

Sidney Poitier Director since 1994

Mr. Poitier, 72, is an actor, director, and writer, serving as Chief Executive Officer of Verdon-Cedric Productions, a film production company. Mr. Poitier is a life-long friend of Michael Eisner.

Robert A.M. Stern Director since 1992

Mr. Stern, 60, is a practicing architect, teacher, and writer. He is Senior Partner of Robert A.M. Stern Architects of New York, which he founded, and a Fellow of the American Institute of Architects. Mr. Stern is also Dean of the Yale School of Architecture and previously served as a Professor and Director of the Historic Preservation Department at the Graduate School of Architecture, Planning and Preservation at Columbia University.

Andrea Van de Kamp Director since 1998

Ms. Van de Kamp, 56, is Chairman of Sotheby's West Coast, a unit of the international auction company, since 1989, and is a member of the Board of Directors of Sotheby's North America.

Michael D. Eisner Director since 1994

Mr. Eisner, 57, has served as Chairman of the Board and Chief Executive Officer of Walt Disney since 1984. Mr. Eisner acts as the Chair of Disneys Compensation Committee.

Stanley P. Gold Director since 1987; also, from June to September 1984

Mr. Gold, 57, is President and Chief Executive Officer of Shamrock Holdings, Inc. Since 1990, he has also served as President of Trefoil Investors, Inc., the general partner of Trefoil Capital Investors, L.P., an investment partnership, as well as President of Shamrock Capital Advisors, Inc., which acts as manager of the partnership.

Thomas S. Murphy Director since 1996

Mr. Murphy, 74, was Chairman of the Board and Chief Executive Officer of Capital Cities/ABC, Inc. for 24 years from 1966 to 1990 and from February1994 until his retirement in February 1996.

Leo J. O'Donovan, S.J. Director since 1996

Since 1989, Friar O'Donovan, 65, has been President of Georgetown University, where he also holds an appointment as Professor of Theology.

Irwin E. Russell Director since 1987

Mr. Russell, 73, is an attorney presently engaged in private practice, who has served as an attorney and executive in the entertainment industry for many years. Mr. Russell acts as Michael Eisners private attornery

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