Former Senator Defends Disney Board

25 November 2004

As befits his status as Northern Ireland peace broker and former US senator, George Mitchell was honoured by questions from the judge hearing the Walt Disney Company lawsuit in Delaware.

Mitchell, now chairman of Disney, told Judge William Chandler he did not believe it was in the company's best interests to continue its rocky relationship with former president Michael Ovitz and there was no way round paying him the $140 million (€106m, £75m) "no cause" severance package.

The Disney board is being sued by shareholders who claim it was negligent in its hiring and firing of Ovitz and that it failed to properly scrutinize his contract. They argue his liberal expense-account spending and ineffectiveness was cause enough to sack him in 1996, after just 14 months in the role.

Mitchell maintains the board, to which he was appointed in 1995, had a "substantive" discussion about Ovitz and his generous pay deal before he was taken on as president.

He couldn't recall whether documents were distributed, but he says: "We all knew there was a lot of money and options involved."

When it later became apparent the relationship between Ovitz and Disney was beyond repair, Mitchell says he relied on the company's then legal eagle, Sanford Litvack, for advice on Ovitz's sacking.

At a board meeting in January 1997, in which Mitchell particpated by telephone, he says Litvack reported there was no reason to fire Ovitz for cause and the contract only allowed sacking for instances of gross negligence or malfeasance.

The case continues.

Data sourced from Financial Times; additional content by WARC staff