Front-row Seats to the Disney Showdown
By Geoffrey Colvin

(FORTUNE Magazine) – Executives of six major public pension funds will meet privately with Walt Disney directors on May 21. Topic: Disney's future. Institutional investors were largely responsible for the stunning recent 45% shareholder vote against CEO Michael Eisner's continuing as a director. New York State comptroller Alan Hevesi sent the meeting request to Disney's nonexecutive chairman, former Senator George Mitchell. Hevesi requested the meeting even before the board's recent statement of continued full confidence in Eisner.

Through an apparent glitch in a beta version of a new Microsoft product code-named Gazer, a transcript of the highly anticipated meeting, which hasn't yet occurred, was e-mailed to FORTUNE. Hevesi and Mitchell are the only speakers; Hevesi speaks first.

"Where's Michael?"

"He isn't here."

"Duh! I see he isn't here. Why not?"

"I told you this meeting would be with a group of directors I would designate, and I didn't designate him. It seemed the least I could do for him--as you may recall, he designated me to be chairman after you guys nearly canned him at the annual meeting."

"George, right there you can see why we're concerned about whether the board is actually calling the shots at Disney. You're supposed to be the independent chairman, but Michael actually gave you the job. He's been CEO for 20 years now, and he worked miracles at first. But ever since he bought ABC the stock has been a dog. That's seven years now! And for eons it looked like everyone on the board was petrified at even saying the word 'succession.' I mean, you say you've got a succession process underway now. Well, if Michael, God forbid, got hit by the monorail tomorrow, who would become CEO?"

"I don't think it would be appropriate--"

"Excuse me?"

"I'm really not at liberty to disclose--"

"My friends and I could make that 45% into 51% very, very easily."

"Bob Iger."

"Bob Iger, the COO! Wasn't he supposed to be overseeing ABC? You know how many programs ABC had in the top 15 this season? One! And it was Monday Night Football, which, in case you hadn't noticed, was over in December!"

"Well in case you hadn't noticed, Mr. Fat-Assets, we just fired everybody who was running ABC!"

"Oh really? How come?"

"Because they weren't perform--wait a minute! I don't think we need to go down this road."

"Look, George, my confreres and I have seen this situation before. Remember, we own every stock. We've seen it all. And I don't care how great your company is, if you choose or keep the wrong CEO, we're all in trouble. Yes, your company has a great name. That won't protect you. How about General Motors? Two wrong CEOs in the late '80s and early '90s, and it nearly went bankrupt. Westinghouse, one of the great names in American business, chose four wrong CEOs in a row and disappeared entirely. Coca-Cola? Names don't get much greater than that. They've had two wrong CEOs in a row, and now the boys from Heidrick & Struggles are out scrounging for a new one and not having an easy time. That is not a company controlling its destiny."

"So what do you want us to do?"

"We want you to tell us exactly how you're developing the candidates to be Michael's successor--what qualities you've identified as critical and how you're building them in Disney's top managers. Tell us how, and how often, you're evaluating high-level executives inside the company and outside it. Michael's contract expires in just over two years, when he'll be 64. We want you to tell us, right now, how you've got at least three really superlative internal candidates in development for that job, plus your timetable for picking the winner and your contingency plan if something goes wrong. Can you do that?"

"With Michael not present I don't think it would be fair--"

"51%, Mitchell!"

"Alan, we're working on it."

"You should have been working on it for years already! Our funds pretty much own this company. You represent our interests. The most important thing you can possibly do for us is make sure Disney has the right CEO. And you haven't been doing it! George, we are not going to stand for this Mickey Mouse management-development process!"

"You say that like it's a bad thing."

"I think this meeting is over."

GEOFFREY COLVIN, senior editor at large of FORTUNE, can be reached at Watch him on Wall $treet Week With FORTUNE, Friday evenings on PBS.