Court Hears Crucial Disney Meeting Was Not Minuted

19 November 2004

The mystery of the missing minutes was pondered in the Delaware courtroom where shareholders are suing the Walt Disney Company board.

Ceo Michael Eisner maintains his fellow directors were kept informed of moves to get rid of colorful president Michael Ovitz and, crucially, of his entitlement to a $140 million (€107m, £75m) 'no fault' severance package after just fourteen months in the job.

Eisner says the issue was discussed at a board meeting in November 1996, a month before Ovitz was given his marching orders.

However, it would appear there are no minutes of the meeting nor of a subsequent executive session where he claims the severance entitlement was made clear.

And he concedes the board never adopted a resolution granting Ovitz the 'no fault' termination.

Shareholders claim the company's directors were negligent in hiring the swashbuckling Ovitz, failed to properly scrutinize his contract and failed to fire him for 'cause'.

They also aver that Ovitz' poor performance and lavish spending during his troublesome tenure, 1995 through 1996, was reason enough. They want the money back, plus compensation.

Under cross-examination by the plaintiff's lawyers, Eisner said he sought advice about the payoff from the company's top legal eagle, Sanford Litvack, when it became obvious Ovitz would have to go.

He was assured by Litvack, who loathed Ovitz, there were no grounds to fire him for cause and deny him the severance: "This was not a grey area. It was cut and dry from day one and I accepted that."

The case continues

Data sourced from Wall Street Journal Online; additional content by WARC staff