One of the Better Books We've Read on 

Activist Investing and Corporate Governance

We just got around to reading DisneyWar, and recommend it highly to anyone with an interest in activist investing and corporate governance. It makes a worthy addition to our bibliography of useful resources on activist investing.

Author James B. Stewart, who wrote Den of Thieves about the excesses of the merger mania in the 1980s, had unprecedented access to Disney executives and materials. He writes not only a fast-paced account of the rise and fall of one of the most famous companies in the US, but also a persuasive manifesto for BoD accountability. He has an insider view on

• Jeffrey Katzenberg's resignation
• the hiring and firing of Michael Ovitz
• the failed deal for Fox Family

among many other fascinating points in the story. He points clearly to how a dominant CEO can manipulate complacent directors, and how that sorry situation can torch billions in investor money.

The only problem with the book is, it ends too soon. Stewart's narrative concludes in September 2004, with CEO Michael Eisner's resignation (effective only in 2006, when current CEO Robert Iger succeeded him).

It necessarily does not include the landmark derivative lawsuit filed against Disney's directors, alleging breach of fiduciary duty in approving the over $100 million in compensation that Disney paid to Eisner's best friend and failed Disney President Michael Ovitz. The best way to understand this aspect of the story is though Chancellor William Chandler's highly readable and controversial Delaware Chancery Court decision in the case. As Chandler writes, 

As I will explain in painful detail hereafter, there are many aspects of [the BoD] conduct that fell significantly short of the best practices of ideal corporate governance. 

as he rules in favor of the Disney directors. 

Summer has started to come to a close, but it's a fast read and worth the time.