"You promised me a few years ago that you would go to heaven and haunt me from there. You've let me down." -- Philip Purcell, Morgan Stanley CEO, to activist shareholder Evelyn Davis Michael Eisner could face his own Alamo on Apr. 26 when the Walt Disney (DIS) board meets with its embattled CEO. BusinessWeek has learned that the meeting, initially scheduled to review Disney's strategic plans, will focus on succession planning for the top Mouseketeer and whether Eisner will remain when his contract ends in September, 2006.
The board, once strongly allied with Eisner, is heavily splintered, with only two of its nine independent members in his corner -- tech executive Judy Estrin and Georgetown University President Emeritus Leo J. O'Donovan. Among those pushing for Eisner to name a successor are former Seagram (V) Vice-Chairman Robert Matschullat and Northwest Airlines (NWAC) Chairman Gary Wilson, say sources close to the board. Neither returned calls. Disney President Robert Iger is a candidate, but some directors want an open search. Disney declined to comment.
Eisner may get a bit of good news soon: The SEC is expected to let Disney off with a reprimand after probing its failure to disclose several transactions with directors, including hiring two directors' children and a spouse. That slap on the wrist could be in sharp contrast to the earful the board may give Eisner. John Kerry has had tough words for "Benedict Arnold CEOs" who export U.S. jobs. But according to a May, 2003, financial disclosure, the Democratic candidate has stock in several U.S. multinationals that have outsourced work -- General Electric (GE), Procter & Gamble (PG), and Verizon (VZ), among others. Such holdings, through trusts Kerry inherited, account for a big part of his portfolio, at least $125,000 and as much as $650,000. (Kerry was required only to declare ranges.)
The Kerry camp says the Massachusetts senator has no say in the investments. "It's a silly comparison," says Senior Adviser Michael Meehan. "Senator Kerry has a plan to crack down on companies who send jobs overseas."
The investments raise the question: Can Kerry coerce U.S. companies to keep jobs at home when investors -- including those handling his money -- are buying the bottom line that comes with offshore sourcing? "It does have the specter of hypocrisy," says Charles Lewis, executive director of the Center for Public Integrity, a nonpartisan watchdog. It seems as if Kerry's trust-fund managers haven't been heeding his stump speeches. Donald Burr, the founder of the 1980s low-fare airline phenom People Express, is back with a new idea: tiny jets that will shuttle executives on demand bet-ween small air-ports. He even signed up his onetime rival Robert Crandall, the former CEO of American Airlines (AMR), as an investor and chairman of the new venture, iFly Air Taxi.
Moreover, former hedge-fund manager Julian Robertson has ponied up $4 million, part of $6.3 million recently raised in a convertible stock sale disclosed on Mar. 29. Crandall says he'll have a consulting role to CEO Burr.
Burr, 62, figures he can offer a cheaper service than private jets with a new generation of four- and five-passenger jets expected to cost under $2 million apiece, far less than current small planes. He hopes to charge about 65% less than what someone might pay to fly on a private jet. Burr says iFly will "bring the private-travel market down from CEO level to manager level." The service will take off next year, with about 25 jets in the Northeast.
Burr doesn't expect to create any turbulence for the major airlines. But with the fiercely competitive Crandall on board, iFly is bound to pop up on a lot of radar screens. What were they thinking? An ad circulating on the Web shows the sunroof of Ford's (F) European Sportka decapitating a cat. The 39-second video purports to be a Ford "viral" ad, meant to create buzz. Ford insists it vetoed the spot, proposed by an ad agency to give the souped-up minicar a bad-boy image. How the ad got out is a mystery, and Ford says it's "reprehensible." Animal rights groups are outraged, too. Yet the ad Ford did approve hasn't fared much better: It shows a pigeon hitting the car's hood and then lying motionless on the street, angering bird lovers. Ford says both cat and pigeon are digital -- no animals were harmed in making the ads. Luring industries with tax breaks is a boondoggle, concludes a recent study by the Economic Policy Institute. The study found that state and local taxes account for only 0.8% of a company's costs and pale in importance next to the availability of qualified workers, proximity to customers, and the quality of public services.
Tax breaks also sap budgets for education and roads. But the political dividend from bringing in a factory or a new headquarters, the study's authors admit, often trumps economics.
The nanotech industry has a lot riding on the research of John Bucher. He's one of the government's top scientists testing the toxicity of nanoparticles -- the hot area of research which may soon be responsible for everything from stain-resistant trousers to solar panels the size of credit cards. On Mar. 28, a Southern Methodist Univer-sity study tied the synthetic molecules to brain damage in fish, fueling concerns about the health and environmental effects of nanoparticles.
As head of the toxicology program at the National Institute of Environmental Health Sciences in Research Triangle Park, N.C., Bucher's research could determine how the technology is used to develop new medicines, mat- erials, and energy sources. Bucher, 52, cautions that little is known about the effects of nanotech. "It's good we're looking at things now rather than waiting until they are in the environment." Bucher, who hopes to have answers by the summer of 2005, won't say if he wears stain-resistant pants. With the proliferation of Web sites, much of the Internet has become a repository of dubious info doing its best to masquerade as fact. One of the most glaring examples can be found on a Web site run by Eliyon Technologies in Cambridge, Mass., that advertises itself as a way to track down past employees at over 1 million companies. Enter "Microsoft (MSFT)" into the database and it spits out 5,200 names of "former" employees. Not so fast, though. The site lists Linus Torvalds as a "co-founder" of the software giant.
That should come as news to anyone who follows technology and knows that Torvalds is the creator of the Linux operating system, perhaps the biggest threat to Microsoft's Windows empire. But Torvalds, tongue firmly in cheek, says it's all too true. "We've kept it quiet for years, since I left early on after some technical differences of opinion," he writes in an e-mail.
Torvalds goes on to explain how he was airbrushed out of an early company photo of co-founders Bill Gates and Paul Allen, and a handful of others. "Quite frankly, I think they should have airbrushed out the rest of the founders, too, if they really wanted it to look good, but hey, that may be just the bitterness talking." Microsoft officials declined to comment.
Eliyon is a bit red-faced about it all. The company uses software to rummage electronically through Web sites to suss out names of folks who have left their jobs. In this case, things didn't work too well. "These are very complex [software] algorithms, and they're bound to make mistakes," says Chief Executive Yonatan Stern.
Torvalds' rancor, though, remains focused on his "former employer." "It was a pretty acrimonious split, and it's still painful after all these years," he quips. It has been more than four years, and the University of Missouri at Columbia is still looking for a candidate to fill the Kenneth L. Lay Chair in Economics. Yes, that's ex-CEO Lay of Enron, who is under investigation for his role in Enron's collapse.
University officials say they aren't blaming the delay on the Lay name. Some applicants lacked credentials, while others didn't want to move to Columbia, Mo. But it's a safe bet that some recoiled from the name. "My guess is that it is a negative," says Edward Snyder, dean of the University of Chicago's business school. Lay declined to comment.
The university has not asked Lay, who donated $1.2 million for the chair, to remove his name. But if he is indicted, it may have little choice.