Disney Adds Pepper; Will Wall Street Sneeze?

And as the Wall Street Journal aptly points out, "...Mr. Pepper has little media or technology experience..." -- but that's not the part that should really concern Wall Street or Disney shareholders. (After all, P&G is a media company in its own way, as one of the world's largest advertisers in broadcast and print.)

No, what should be of concern is what can happen when a CEO runs roughshod over a corporate board, as Disney CEO Michael Eisner did for almost 20 years. We'll leave aside 20/20 hindsight criticisms, like the fact that Disney passed on "Lord of the Rings," "The Sopranos" and "Survivor," and that Eisner hated "Lost" so much he wanted it cancelled almost immediately.

What ought to concern investors is that, thanks in no small part to Disney's rubber-stamp board, Eisner's whimsical, almost schizophrenic, mien towards former employees cost the company hundreds of millions of dollars: An opportunity to settle with Jeffrey Katzenberg for $90 million was crushed by Eisner; Disney ended up paying $280 million.

Thanks to a lax board and asleep-at-the-wheel compensation comittee, Disney approved that now-infamous $130 million severance package for Eisner's buddy and train-wreck of a president, ex-agent Michael Ovitz. Eisner's extravagance and the board's shocking lenience would leave Disney embroiled in shareholder lawsuits, litigation finally dismissed only last August.

Pepper worked for Procter & Gamble for 38 years, then was named chairman and chief executive in 1995 for seven. In short, he's used to a CEO telling the board what to do, because that's how he ran P&G.

Unfortunately, despite all these woes of slipshod corporate governance, as the New York Times' Laura Holson observes, the song remains the same at Disney: "I don't see what he brings to the party," an analyst at Sanford C. Bernstein & Company, Michael Nathanson, said. "I don't see it as a material change in operations.''

The sweeping reforms passed by Congress -- the Sarbanes-Oxley Act of 2002, or "Sarbox," as Wall Street calls it -- helps to some degree. But just because an over-reaching dictator like Eisner has been replaced with a consensus-builder like Robert Iger doesn't mean that the company shouldn't have a fiercely independent chairman. Unlike the inexperienced-but-presitigious former Senator whom he replaces, Pepper "is described by former colleagues as an affable consensus builder," according to the Journal.