Pixar and the Preservation of Culture

Vic Fleischer posts over at Conglomerate about an unusual aspect of the Disney buyout of Pixar: a statement about management policies for the preservation of Pixar's culture.  The statement is up on EDGAR here.

So how does a company preserve its culture post-merger?  According to the statement, it institutes policies that:

• provide for the continuation of upper management in relatively secure positions,
• create an oversight committee,
• retain employment compensation policies,
• keep the Pixar brand viable, and
• keep the same physical location. 

I share Vic's interest in corporate culture and its preservation post-merger.  Corporate culture can be incredibly significant to the success of a merger, but it is very difficult to quantify or measure.  The Paramount v. Time case is perhaps the most famous corporate law decision to turn on corporate culture.  As Chancellor Allen noted in that case, "The mission of [Time Inc.] is not seen by those involved with it as wholly economic, nor the continued existence of its distinctive identity as a matter of indifference."  Of course, corporate culture need not be set in opposition to economics; it may be all about economics.  In my paper on the AOL Time Warner merger, I discuss the late-1990s culture at AOL, which effectively focused employees on the share price as the measure of corporate success.

The Paramount v. Time case is often criticized as allowing executives to escape shareholder scrutiny by empty references to a "culture" that is nothing more than the continued employment of those executives.  The Disney-Pixar policy statement does include the protection of Pixar management as part of its efforts to preserve the culture.  But it goes beyond that to include physical space, branding, and the treatment of lower level employees.  And while the policy statement is not binding on Disney management, it will create social expectations about those policies that is not without substance.  As the two companies begin their new life together, it will be interesting to follow whether these policies have their desired effect on the culture of both institutions.