January 25, 2006 1:00 PM PST

Jobs' new Disney role raises conflict concerns

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marketing work as part of the pact, which HP inherited as part of its Compaq Computer buyout. In 2003, HP extended the Disney deal for an additional 10 years.

For now, Disney says Jobs may take himself out of the stream of discussion for this kind of sensitive issue.

"If there are occasions when the board deals with company business with Apple, appropriate steps, which may include recusal, will be taken to ensure that conflicts of interest are avoided," said Disney spokesman David Caouette.

An Apple representative had no immediate comment on the issue.

Avoiding a Mickey Mouse approach
Not all corporate governance experts are worried about this dual Jobs role.

Paul Lapides, director of the corporate governance center at Kennesaw State University in suburban Atlanta, said he expects conflicts, but he predicts that Disney and Jobs can manage them. In some cases, that may mean Jobs will have to refrain from voting, while in other instances he may have to recuse himself entirely from particular discussions.

"One of the important things is for the board to address these conflicts head-on and not be Mickey Mouse with the situation," Lapides said.

To some extent, it's an area both companies have practice in addressing, and for which both have come under criticism previously.

Apple, for example, was cited in a 2002 Business Week article as having one of America's worst boards, a rating that included measures such as the presence of an independent auditor or financial ties with outside directors. That is the most recent survey of the issue by the magazine. Disney was on the magazine's list of bad boards several times in the 1990s.

In 2002, Apple shareholders put forth a measure to require that the company's compensation and nominating committees be made up entirely of independent directors. The shareholders also wanted to exclude directors who were significant Apple customers or executives at companies on which Jobs sits as a director. At the time, Apple's board members included Jerome York, then-CEO of large Mac dealer Micro Warehouse and Gap's then-CEO Millard Drexler. Jobs, at the time, was on Gap's board of directors.

He later left Gap's board, and Apple added former Vice President Al Gore as another independent director. York and Drexler remain on Apple's board, but both have new posts, York as a venture capitalist and Drexler as CEO of J. Crew. Apple's former CFO, Fred Anderson, is also on the company's board, along with Jobs and Intuit Chairman Scott Cook and Genentech CEO Arthur Levinson.

After long criticism by shareholders, Disney's board of directors was reformed in 2003, reducing the total number of directors from 17 to 13 and giving outside, or so-called independent, directors more power. Jobs, a new 14th board member, will be counted as a nonindependent, or someone with ties to companies that have financial dealings with Disney, the companies said Tuesday.

That qualification helps, but it doesn't eliminate concerns, Dartmouth's Eckbo said. Eckbo is one of a group of governance experts who have called for stricter rules that guard against conflicts even if there are some costs to the companies. Regardless of how strong they might be, efforts to keep Jobs out of decisions that affect Apple are unlikely to be perfect, he said.

"That comes down to whether (those efforts) are actually feasible," Eckbo said. "The fact that Jobs leaves the room when they talk about Apple doesn't mean that he doesn't have an influence on the outcome of the conversation."

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Think Again
I don't think anyone has ever really thought about calling something a "Mickey Mouse" operation or product. The rodent made Walt and company millions, so I, for one, would be more than happy to be part of a Mickey Mouse operation.

I hope the Disney - Pixar merger brings more quality products to the public. Something really needed in todays entertainment world.
Posted by Cgorter (3 comments )
Reply Link Flag
A bad article all around
This article was weak and biased. Bottom line, Steve Jobs started
a company that was better at doing Disney's job than Disney
itself. Pixar was not the only asset that Disney got, they got one
of the most successful corporate leaders in the world. He now
has the largest private stock portfolio of Disney. To be honest,
Pixar had to be bought out before they were competing with
Disney. Giving Steve Jobs a reason to care about Disney's
fortunes is part of the end goal. Apple Computer (Under Jobs)
has innovated the distribution system for video. How is an
Apple/Disney alliance a conflict of interest? It isn't. It is
something for other companies to wish for upon a falling star.
Posted by (28 comments )
Reply Link Flag
I Agree.
This seems to be the article's premise...

"Jobs has more influence than before, so you should all be wary of the evil/unfair things he might plan."

I think it's fine if Disney and Apple help each other, as long as they continue making good products.

On the other hand, if they squeeze out competition so they can stop innovating (ala MS I.E.), or squeeze out competition so they can price gouge (ala MS Office), then I will have a problem with their actions.
Posted by open-mind (1027 comments )
Link Flag
Jobs did not start Pixar,
he bought it as an investment for $10 million. The company was in
in existence before Mr. Jobs bought it and if memory serves me
correctly was started by one George Lucas.
Posted by thomcarl (72 comments )
Link Flag
Apple/Disney Alliance
The point of the article is that there is no Apple/Disney Alliance. It is Disney and Pixar that have merged.

So the shareholders in Apple and Disney have two different agenda.

Disney will want to make the most profit from their content while Apple for their Video distribution will want to but the content for the best price possible. If Steve Jobs is on both sides of the table during the discussions who will win? Will there be a bias? Will Apple's profitability be affected in the interest of growng Disney or will Disney's profitability be affected?

The heart of the matter is relevant, but I agree that it is badly presented.
Posted by ahickey (177 comments )
Link Flag
He owns shares of both companies...
... as he owned shares of PIXAR and APPLE. JOB is probably doing what's best for him AND the companies. Apple and PIXAR are both his babies, he will try to do what is best for them. Disney buys PIXAR, so he should get some controll inside of DISNEY to keep his baby alive.
Posted by lucien64 (229 comments )
Reply Link Flag
Or Apple/Disney lead the industry...
Or maybe this is what's needed to get a 'traditional' industry off it's butt and moving in the right direction.

So what if the Apple/Disney relationship gets closer, everyone else seems to be sitting on their hands not really doing anything (just talking).

Perhaps they'll lead by example and we'll all be better off for it (including competing companies who will obviously waiting to follow any successful model Apple/Disney create because they can't come up with strategy on their own. And then they'll complain about conflict and fair terms for content and wah-wah-wahhhhh!!!!).
Posted by cagerattler (72 comments )
Reply Link Flag
What about Sony?
Take it one step further. Sony bought up a movie studio and
brought BMG Music on board as well. Rather than a conflict of
interest, this was supposed to be a brilliant move. It hasn't
worked out that well, of course.

Nevertheless, Sony/BMG definitely has mixed incentives in
negotiating with Apple and other companies that operate music
download services and make mp3 players, since it competes in
the same markets. It is not surprising that Sony is/was the big
holdout in Australia and Japan for getting music to the iTunes
music store. Sony would surely prefer to be the dominant

So, to me, if Jobs now sits on the Disney board, it is not such a
big deal. These sorts of alliances are not uncommon.
Posted by Thrudheim (306 comments )
Reply Link Flag
Re: Sony
Agreed, the Sony electronics-music-film combination is far
more strangled together than the Apple-Disney situation.

Apple just won't get big discounts and such but if Disney treats
Apple equally fair with other tech company's then thats more
than enough. At least there won't be an exclusive contract with
MS over the content. :)
Posted by Peter Bonte (316 comments )
Link Flag
It started as the computer graphics division of Lucas Film...
...and Jobs did a buyout for 10 MUSD. You can read the history of PIXAR at <a class="jive-link-external" href="http://www.pixar.com" target="_newWindow">http://www.pixar.com</a>.

Posted by lucien64 (229 comments )
Reply Link Flag
i dont think you should let miley do hannah montana its not fair for what she did i think you need to replace her with someone esle some one that looks like hannah not a silly girl in a wig thats so fake miley so fake she a look stealer anyway she stold hilary duff lizzy mcquire movie looks for mileys hannah montana that aint right thats why hilary duff changed her look for? all because of miley cyurs because miley dont like hilary duff at all shes jeouls of her big time? sence hannah montana show is no more hilary duff went back to her old look again im so glad there you go have hilary duff play the part of hannah montana shes real her look her hair its all real not a wig? hilary can sing dance act way better than mliey. miley blew it she dose not desreve to be hannah montana ever again and she lied to all the young girls who likes hannah miley told the girls hannah was a real girl and she aint its only miley in a wig those girls find out there going to be mad and not watch the show again and you lose some ratings big time and milery wounld lose some fans? like me? fair is fair mliey messed up thats the way it should be please replace her or take of the show because nobody wants to see a girl who kisses other girls or be naked on tv thats gross you know how bad she made diany channle look? bad?
all my friends siad if you bring her back they aint going to watch it because of what miley did gross?
Posted by sara2535353 (1 comment )
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