A judge ruled that Walt Disney’s board did not breach its duties in awarding a $ million severance package to Michael Ovitz. Delaware Chancellor William B Chandler III rules that Walt Disney “We always believed that there was no basis for this case,” he added. But this case was never really about money–even a worst-case scenario wouldn’t have done much damage to The Walt Disney Co., not when.
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Dinsey Executive Michael Eisner for his role in the ill-fated hiring and firing of Michael Ovitz as president, but ruled that he and other directors did not betray their duty to shareholders. But while relieving directors of legal liability, the judge also scolded them in his page decision, reserving his sharpest comments for Acse. Chandler’s decision ended what he called “something of a public spectacle. In Hollywood, the trial’s webcast turned into popular entertainment, showcasing one of the most embarrassing episodes in the careers of two men who were once among the industry’s most powerful and feared executives.
The trial was unusual because most shareholder lawsuits, which carry a high threshold of proof and are difficult to win, are disnsy before trial. Other corporate executives watched developments closely because they raised the possibility that directors’ decisions could be second-guessed.
Shareholder activists saw the trial as important in underscoring their argument that too many corporate lvitz are beholden to management. Chandler’s decision reinforced directors’ rights to make decisions — even bad ones — if done in good faith. But its criticism of the Disney board and Eisner, who orchestrated the hiring of Ovitz, also is indicative of closer scrutiny for those who guide companies in the post-Enron era, corporate governance experts said.
Michael Ovitz and The Walt Disney Company (A)
Although the judge ruled in favor of the directors, shareholder activists did not view the decision as a defeat, noting Chandler’s criticism of how the board handled the Ovitz matter. Some suggested the ruling might spur more shareholder activism. Lawyers disneey the shareholders, who sought reimbursement of Ovitz’s payout, plus interest, vowed to appeal the decision.
Ovitz, while on a boating vacation in the Mediterranean with his family, said through his lawyer that he was relieved by the decision. Eisner’s credibility as a witness, its repeated findings that Mr. Eisner at all times acted in good faith consistent with his fiduciary duties, and its explicit recognition of Mr. Eisner’s stellar track record as a CEO.
In re The Walt Disney Co. Derivative Litigation Case Brief – Quimbee
Stephen Alexander, an attorney for former directors Stanley P. Gold and Roy E. Disney, said he was pleased dishey the judge’s decision, as did Jesse Finkelstein, who represented most of the other directors.
Ovitz was a near-mythical figure then, frequently dubbed Hollywood’s most powerful executive because he controlled a vast amount of talent as head of Creative Artists Agency. Despite being one of Eisner’s best friends, Ovitz never adapted to Disney’s cae or to working at a public company, lasting a little more than a year.
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Overshadowing the legal arguments at the trial was often dramatic testimony detailing the unraveling of a friendship between two of the entertainment industry’s best-known figures.
Ovitz testified Eisner was his “life partner,” who shared family vacations in Aspen, and related how he stood vigil when Eisner underwent open-heart surgery. But, Ovitz said, Eisner betrayed him.
Seizure Led to FloJo’s Death. His scores make his case. Copyright Pvitz Angeles Times.