Disney Case Credits Are Ready to Roll

18 January 2005

Lawyers have been playing out the final scenes in the Walt Disney Company epic "Shareholders versus Directors", showing at Delaware chancery court in the US.

As the closing reels approaches, employment lawyer John Fox has told the court that Disney's board of directors took the most prudent course of action when it fired former president Michael Ovitz without cause, thus entitling him to a $140 million (€106m, £74m) severance deal.

He said none of Ovitz's failings during his 14 month tenure at Disney, through 1995 and 1996, amounted to gross negligence or malfeasance, the only "cause" under which he could have be fired without pocketing the pay-off.

Disney shareholders are pursuing the directors for the return of the money, plus interest, claiming they were negligent in their scrutiny of the former Hollywood uber-agent's contract.

Fox says Ovitz's contract was "typical" of agreements for top executives and maintains the real reason for the sacking was "personality issues - part of the human condition".

He says ceo Michael Eisner, a long-time friend of Ovitz, eventually decided the company would be better off without its misfit president, and decided to "bite the bullet".

"When you strip away all the glitz and glamour, at the root bottom this is a simple failed performance expectation case."

Back by popular demand this week is Yale law professor John Donohue who is scheduled to make a second appearance in court on behalf of shareholders.

He is convinced there was "good and sufficient basis" for sacking Ovitz without severance, including ample evidence showing he did not follow Eisner's orders.

Data sourced from Financial Times online; additional content by WARC staff