The Walt Disney Co. (DIS) and two ex-directors who have waged a bitter two-year fight have agreed to a truce, including dropping a contentious shareholder lawsuit challenging the selection of the company's new chief executive officer.

The company said Friday it has named former director Roy E. Disney (search) as a director emeritus and a consultant.

In exchange, Roy Disney and ex-board member Stanley Gold (search) have agreed not to run a challenge slate of directors or submit shareholder resolutions for the next five years. The two also pledged to back the leadership of Robert Iger (search), who succeeds longtime chief executive Michael Eisner (search) in September.

In a brief statement Friday, the company reaffirmed its commitment to rotate members of the board's committees as currently required by the company's corporate governance guidelines.

"In putting aside their differences, the company noted Mr. Disney's long time devotion to the company and welcomed the re-establishment of a relationship with him and his family," the statement said.

"... Disney and Gold expressed confidence in Mr. Iger's leadership, and as Mr. Eisner retires after 21 years with the company, they acknowledged his contribution to the company over the years," the statement said.

Shares of the company rose 50 cents to $25.50 in after hours trading. They closed 55 cents higher at $25.00 in trading Friday on the New York Stock Exchange (search).