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Ovitz Pay Consultant “Afraid of Conflict of Interest”

News, 11 November 2004


An executive compensation consultant, who advised the Walt Disney Company on the hiring of Michael Ovitz "as a favor" to its [then] chairman Michael Eisner, told a sell-out audience at the Georgetown Delaware Chancery Court that he'd had reservations about accepting the assignment because it could pose a conflict of interest with his other duties.

Curiously, the cause of this possible conflict was not spelled out to the court.

Graef [Bud] Crystal, now a columnist for Bloomberg News recalled his thoughts at that time: "This is against my better judgment ... and it was against my better judgement with Ovitz." The latter hunch referred to the events that subsequently occurred.

Following Ovitz' lucrative ousting just fourteen months after his lucrative hiring, Crystal wrote a piece on the affair for e-zine Slate.com. But he declared himself outraged when the publication headlined his article: 'Mike Ovitz got away with murder and I helped him'.

Crystal had already admitted in a pre-trial deposition: "Nobody quantified the total cost of the severance package, and I wish we had."

In mid-August 1995 he wrote a letter to the board about Ovitz' hiring. This outlined "what I understood to be the terms at the time and ... about the level of how that would compare to other people in the outside world."

Questioned by a lawyer for Disney director A Gilchrist Sparks III, Crystal said he decided to take the Ovitz assignment as a favor to Michael Eisner. For this selfless act, Crystal received $509 (€394; £274) for each of the fifty-seven hours he invoiced the company - $ 29,000 in all.

The lawsuit has been brought by Disney shareholders against Ovitz, Eisner and other members of the Disney board. The central issue before the court is whether the board was adequately informed before it agreed to Ovitz's employment contract and later to his ousting under a no-fault termination agreement that allowed him to receive $140 million in cash and stock options.

Crystal had admitted, allege the shareholders, that the board - whose members then included such stellar personalities as Sidney Poitier, Roy E Disney and Senator George J Mitchell - "never considered the costs that would be incurred by Disney in the event Ovitz was terminated from the company for a reason other than cause."

Data sourced from New York Times; additional content by WARC staff