Disney Board Of Directors Declares Annual Dividend, Strengthens Governance, Elects New Independent Director And Appoints Presiding Director

BURBANK, Calif., (Dec. 3, 2002) – The Walt Disney Company (NYSE: DIS) Board of Directors today declared an annual cash dividend of $0.21 per share, payable on January 9, 2003 to shareholders of record at the close of business December 13, 2002. The board also approved an enhanced set of corporate governance guidelines, announced the election of Robert W. Matschullat, former vice chairman and CFO of Seagram, as a new independent director, effective immediately, and appointed Sen. George Mitchell as presiding director. The board also reconstituted the membership of its key committees.

Matschullat, a former senior executive and member of the board of directors at the Morgan Stanley Group, will bring significant additional financial expertise to the Board’s work. He will chair the Audit Committee.

The enhanced governance actions are the culmination of a year-long process in which the company has made significant moves toward greater transparency and stricter governance rules.

“While the key to corporate governance resides squarely in the integrity of the people running a company, these guidelines were designed to ensure that Disney meets or exceeds not just the letter, but the spirit of the new rules,” said Michael Eisner, Disney chairman and CEO. “These new guidelines are another sign of Disney’s commitment to maintaining a leadership role in corporate governance.” In revising the governance guidelines Monday, the board:

Required at least two executive sessions of the board, without the CEO or other members of management present, each year.

Created the position of non-management presiding director, and appointed Sen. Mitchell to lead those executive sessions and assist in setting the work agenda of the board.

Adopted a new and more rigorous definition of director independence.
Required that a substantial majority of the board be comprised of directors meeting the new independence standards.
Provided for a reduction in committee size and the rotation of committee and chairmanship assignments among independent directors.
Added new provisions for management succession planning and evaluations of both management and board performance.
Provided for enhanced continuing education and training for board members.

A complete set of Disney governance guidelines are available in the Corporate Governance section of the company’s Investor Relations Web site, http:thewaltdisneycompany.com/investors/governance.

From October 1995 until June 2000, Matschullat, now a private equity investor based in Greenwich, CT., was vice chairman of the Board of Seagram Company, Ltd., having also served as chief financial officer until January 2000. His responsibilities included finance, strategic planning, tax, accounting and risk management. Before joining Seagram, he served as head of Worldwide Investment Banking for Morgan Stanley & Co. Inc., and was also one of six management members of the Morgan Stanley Group Board of Directors. He is also a member of the Board of Directors of The Clorox Company and McKesson Corp.

Matschullat said he was pleased to be joining the Board of Disney, which he regards as a great company with a very strong brand and set of assets, and he’s especially pleased at the continuous focus on governance.

“Recent history has shown clearly the importance of independent outside directors and strong corporate governance,” Matschullat said. “It’s clear based on Disney’s moves over the past year that this board and management team are committed to strong governance, and I am looking forward to playing an active role in this.” Following approval of the new guidelines, the board conducted its annual review of director independence, taking into account directors’ relationships with the company or with members of senior management.

As a result, the board determined that under the new guidelines, all directors are independent except Michael Eisner, Robert Iger, Roy Disney, Stanley Gold and Robert A.M. Stern. Eisner, Iger and Disney are considered inside directors because of their employment as senior executives of the company. The board concluded that Stanley Gold was not independent because of his significant business relationship with the company’s vice chairman, Roy Disney, and that Stern similarly was not independent because of architectural services that he is providing to Eisner.

As part of the continued focus on enhanced governance, the board also voted to reconfigure its committees (see below) and committed to an ultimate target size of 12 to 15 members. The new slate of director nominees will be published in Disney’s proxy statement in late January.

Today’s actions are the latest in a year-long effort to enhance governance at Disney. During this process, the Disney board has been advised by Ira Millstein, Esq. of Weil, Gotshal & Manges LLP, a leading authority on corporate governance. Earlier this year, Disney also made a number of other modifications to its governance practices, including a requirement of $100,000 stock ownership for each non-employee director and an expansion of responsibility of the Board’s Governance and Nominating Committee.

Effective immediately, here is the roster of Board committees and committee membership:

Robert Matschullat (Chair)
Monica Lozano
Leo O’Donovan, S.J.
Andrea Van de Kamp
Raymond Watson

Judith Estrin (Chair)
John Bryson
Sidney Poitier
Leo O’Donovan, S.J.

Governance and Nominating
John Bryson (Chair)
Judith Estrin
Monica Lozano
Gary Wilson

Raymond Watson (Chair)
Roy Disney
Michael Eisner
Thomas Murphy

The board elected to merge the Executive Performance Subcommittee into the Compensation Committee.