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</TD></TR><TR><TD>[font=Times New Roman, Georgia, Times]Delaware Court of Chancery Chancellor William B. Chandler III has ruled that Walt Disney Company’s board of directors did nothing illegal or in bad faith when it awarded former company president Michael S. Ovitz $140 million in severance pay.
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[font=Times New Roman, Georgia, Times]Chandler issued a 174-page opinion on the high-profile case that captured the attention of Hollywood star-watchers and corporate boards across America.
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[font=Times New Roman, Georgia, Times]Chandler noted that the Disney case, brought by shareholders against the company’s board of directors, CEO Michael Eisner and Ovitz, revealed that Eisner often acted without the board’s knowledge, but did not do so in bad faith. Chandler also noted that a 1986 Delaware law protects corporate officials and directors from liability in failing to act in the ideal of best business practices.
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[font=Times New Roman, Georgia, Times]The court also noted that Eisner, who hired and then fired Ovitz, handled the issue sloppily, not keeping his board of directors properly informed of the situation.
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[font=Times New Roman, Georgia, Times]Anne Foster, an attorney with the firm of Richard, Layton & Finger, represented Disney board members. She was the attorney for defendants when board member Sidney Poitier spent a day in court in Georgetown, Dec. 7.
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[font=Times New Roman, Georgia, Times]“We are very pleased with the result,” said Foster on Aug. 11.
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[font=Times New Roman, Georgia, Times]However, the law firm of Milberg Weiss Bershad & Schulman in New York, which represented the shareholders who pressed the case, said they were disappointed in the opinion and would appeal.
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[font=Times New Roman, Georgia, Times]Plaintiff shareholders charged that Eisner cut a high-dollar deal with Ovitz, a successful Hollywood talent agent, so he could leave Walt Disney Company in 1997 with the no-fault termination clause that Eisner had approved for him.
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[font=Times New Roman, Georgia, Times]While on the stand for three days in Georgetown, Eisner told the court that when he was convinced that Ovitz was not performing up to his expectations, he asked company operations chief Sanford “Sandy” Litvack whether it was possible to scrap the terms of Ovitz’ contract.
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[font=Times New Roman, Georgia, Times]“Sandy told me consistently that there was no basis for cause for terminating Ovitz and breaking the contract,” Eisner said, adding that the contract was to give Ovitz $39 million in cash and stock options valued at $100 million.
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[font=Times New Roman, Georgia, Times]“I would have preferred the money go to Disney,” Eisner said. “The options didn’t matter that much. Those were just a blip.”
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[font=Times New Roman, Georgia, Times]Eisner said he never held an executive session of the board of directors when he wanted to pay Ovitz off and send him packing.
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[font=Times New Roman, Georgia, Times]“I told the board what it was going to cost,” Eisner said. “We talked about the whole situation, but it was a long time ago, and I just can‘t remember all of it.”
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[font=Times New Roman, Georgia, Times]During his time on the stand in Court of Chancery, actor Sydney Poitier told the court he approved of the Ovitz contract.
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[font=Times New Roman, Georgia, Times]“It seemed to me a good way to structure the arrangement,” he said. My opinion was it was fine to hire Ovitz on those terms.”
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[font=Times New Roman, Georgia, Times]Poitier also said that he supported the move to terminate Ovitz and give him the $140 million severance package.
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[font=Times New Roman, Georgia, Times]<CSOBJ h="16" t="DateTime" w="40" region="0" format="ShortDate">8/15/05</CSOBJ> [/font]
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[font=Arial, Helvetica, Geneva, Swiss, SunSans-Regular]Delaware Court of Chancery rules
in favor of Disney board[/font]
in favor of Disney board[/font]
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[font=Times New Roman, Georgia, Times]By Jim Cresson[/font]
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[font=Times New Roman, Georgia, Times]Cape Gazette staff[/font]
</TD></TR><TR><TD>[font=Times New Roman, Georgia, Times]Delaware Court of Chancery Chancellor William B. Chandler III has ruled that Walt Disney Company’s board of directors did nothing illegal or in bad faith when it awarded former company president Michael S. Ovitz $140 million in severance pay.
[/font]
[font=Times New Roman, Georgia, Times]Chandler issued a 174-page opinion on the high-profile case that captured the attention of Hollywood star-watchers and corporate boards across America.
[/font]
[font=Times New Roman, Georgia, Times]Chandler noted that the Disney case, brought by shareholders against the company’s board of directors, CEO Michael Eisner and Ovitz, revealed that Eisner often acted without the board’s knowledge, but did not do so in bad faith. Chandler also noted that a 1986 Delaware law protects corporate officials and directors from liability in failing to act in the ideal of best business practices.
[/font]
[font=Times New Roman, Georgia, Times]The court also noted that Eisner, who hired and then fired Ovitz, handled the issue sloppily, not keeping his board of directors properly informed of the situation.
[/font]
[font=Times New Roman, Georgia, Times]Anne Foster, an attorney with the firm of Richard, Layton & Finger, represented Disney board members. She was the attorney for defendants when board member Sidney Poitier spent a day in court in Georgetown, Dec. 7.
[/font]
[font=Times New Roman, Georgia, Times]“We are very pleased with the result,” said Foster on Aug. 11.
[/font]
[font=Times New Roman, Georgia, Times]However, the law firm of Milberg Weiss Bershad & Schulman in New York, which represented the shareholders who pressed the case, said they were disappointed in the opinion and would appeal.
[/font]
[font=Times New Roman, Georgia, Times]Plaintiff shareholders charged that Eisner cut a high-dollar deal with Ovitz, a successful Hollywood talent agent, so he could leave Walt Disney Company in 1997 with the no-fault termination clause that Eisner had approved for him.
[/font]
[font=Times New Roman, Georgia, Times]While on the stand for three days in Georgetown, Eisner told the court that when he was convinced that Ovitz was not performing up to his expectations, he asked company operations chief Sanford “Sandy” Litvack whether it was possible to scrap the terms of Ovitz’ contract.
[/font]
[font=Times New Roman, Georgia, Times]“Sandy told me consistently that there was no basis for cause for terminating Ovitz and breaking the contract,” Eisner said, adding that the contract was to give Ovitz $39 million in cash and stock options valued at $100 million.
[/font]
[font=Times New Roman, Georgia, Times]“I would have preferred the money go to Disney,” Eisner said. “The options didn’t matter that much. Those were just a blip.”
[/font]
[font=Times New Roman, Georgia, Times]Eisner said he never held an executive session of the board of directors when he wanted to pay Ovitz off and send him packing.
[/font]
[font=Times New Roman, Georgia, Times]“I told the board what it was going to cost,” Eisner said. “We talked about the whole situation, but it was a long time ago, and I just can‘t remember all of it.”
[/font]
[font=Times New Roman, Georgia, Times]During his time on the stand in Court of Chancery, actor Sydney Poitier told the court he approved of the Ovitz contract.
[/font]
[font=Times New Roman, Georgia, Times]“It seemed to me a good way to structure the arrangement,” he said. My opinion was it was fine to hire Ovitz on those terms.”
[/font]
[font=Times New Roman, Georgia, Times]Poitier also said that he supported the move to terminate Ovitz and give him the $140 million severance package.
[/font]
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