Media Moguls Nervy at Disney $140m Payoff Case

20 October 2004

The pocket-size state of Delaware USA enjoys more than its fair share of high profile courtroom battles, perhaps because its benign corporate climate is to business tycoons what Florida is to geriatrics.

Currently wowing 'em in downtown Delaware is the case of Walt Disney Company investors versus Disney directors, in particular chief executive Michael Eisner.

Enriching the serried ranks of opposing lawyers is an issue with far-reaching implications for other US corporate giants: whether the Disney board violated its fiduciary responsibilities by failing to scrutinise the employment contract awarded to quondam Hollywood agent Michael Ovitz.

Following a tempestuous working relationship with Eisner - a former pal and at that time Disney's chairman/ceo - Ovitz was painlessly ousted, anaesthetised by a $140 million (€111.87m; £77.61m) severance package.

Also attracting attention is the all-star witness roster which not only includes the stellar egos of Ovitz and Eisner, but also the Oscar-winning film actor and one-time Disney board director Sidney Poitier.

The investors are suing Disney and Eisner for recovery of Ovitz' humungous payoff. And given that anger at executive pay excesses in general has reached an all-time high, other companies are awaiting the outcome of the benchmark case with sweaty palms.

Nell Minow of investor pressure group Corporate Library opines that fallout from the trial could be "seismic".

Data sourced from; additional content by WARC staff