Disney’s Latest Blockbuster: Shark Tale II ?

25 October 2004

If Delaware's Chancery Court was several hundred times real-life size, with tickets on sale for its current attraction, it could create an all-time box office record.

And some might mistake the saga of naked ambition, greed and blood on the boardroom carpet as portrayed in the case of Disney shareholders versus the board of the Walt Disney Company for a sequal to the latest animated blockbuster from rival movie producer Dream Works: Shark Tale.

Admittedly, the Disney scenario is less credible than that of its rival, although there is no shortage of dorsal fins ...

The story so far: In 1995 Hollywood's most powerful showbiz agent is enticed by a close friend to become president of Disney at an astronomic salary - allegedly agreed without prior reference to the Disney board.

Said agent proceeds to run-up megabucks on his personal expense account whilst achieving little else. Open warfare ensues with aforesaid pal (who happens to be Disney's chairman/ceo). Terms like "psychopath" are bandied. Atmosphere in Disney's executive washroom more creepy than Texas Chainsaw Massacre.

Fast forward fourteen months when agent's erstwhile pal engineers his removal with a $140 million (€110.77m; £76.6m) severance package. Dissolve to speeded-up sequence denoting passage of time … clouds racing across sky; leaves changing from green to rust and back again … and slow fade into a Georgetown Delaware courtroom. The time is the present day.

Thrill to the epic's legendary stars. Gasp at swashbuckling Michael Ovitz as the ambitious agent who dared challenge Hollywood's most feared tycoon; shiver at scary Michael Eisner in the latter role.

Sadly, however the scenario has not gone down well with the critics - especially those of the shareholder variety - who are unimpressed both with the hiring and firing of Ovitz and now demand their money back.

The shareholder derivative lawsuit, which has been in progress for more than seven years, claims that Disney's board failed in its fiscal responsibilities by not properly scrutinizing Ovitz's employment contract when he joined the company in 1995 and then granting him a no-fault termination in 1996.

Cut to courtroom, Friday. Close-up of John J Donohue, a Yale University law professor and witness for a group of Disney shareholders.

Having reviewed both Californian law and the small print on Ovitz' employment contract, Donohue avers that Disney's board had the right (which it failed to exercise) to refuse Ovitz a no-fault termination, resulting in the aforesaid huge severance package.

The Prof cited "habitual lying" as one reason why the board could have sent Ovitz packing minus the payoff. According to a draft report by auditor PricewaterhouseCoopers, he incurred $4.8 million in expenses while with the company, including such items as $1,000 dinners that allegedly had purposes other than business.

Lawyers for Ovitz, who has yet to take the stand, issued a trailer trashing Donohue's evidence: "The plaintiff's expert based his unfounded opinion on nothing more than second- and third-hand hearsay and gossip. When the actual facts are presented and fairly considered, they will clearly show that there was absolutely no cause to terminate Mr Ovitz's employment, and that he was absolutely entitled to accept the contractual benefits he received from Disney.

Can Ovitz hang on to his Disney moolah? Will iron man Eisner crack under the remorseless grilling of hostile alien lawyers? And will Julia Roberts appear as a surprise witness for the defense? Stay tuned for the next thrilling episode.

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