Eisner plays down Ovitz friendship at Disney trial
From wire reports
GEORGETOWN, Del. — Walt Disney Co. (DIS) Chief Executive Michael Eisner on Monday played down his friendship with former Disney President Michael Ovitz, whose brief and tumultuous tenure as president of the company has landed both men at the center of a shareholder trial.
In his first day of testimony at the civil trial, Eisner, wearing a light green tie dotted with black Mickey Mouse ears, defended the decision to hire Ovitz, but offered a much different view of their relationship than is often reported. (Related: Disney lawsuit could ripple through Corporate America)
Eisner said Ovitz was someone who was "fun to go to dinner with," but balked at describing the one-time top talent agent as his best friend when he joined Disney in 1995. Eisner instead said he was a "good friend" and a "reasonable friend" to Ovitz.
"Michael Ovitz had a lot of best friends," Eisner said. Michael Ovitz was — is — a salesman — and we all deal in hyperbole."
He then added: "I was amused by him. He was one of my friends."
Ovitz, Eisner and several current or former directors are being sued in the Delaware Court of Chancery over a $140 million severance package paid to Ovitz when he left Disney after 14 months as the company's president.
In bringing their lawsuit, shareholders charge that Eisner engineered the deal to hire Ovitz, who was a powerful Hollywood talent agent and founder of Creative Artists Agency, without fully consulting the board.
They also charge that Eisner let his friendship with Ovitz cloud his judgment 14 months later when Ovitz was granted a no-fault termination rather than fired. With the no-fault termination, Ovitz was allowed to walk away from Disney with a $140 million severance package.
Shareholders want that severance package returned.
The lawsuit also charges 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 the no-fault termination.
Eisner said Ovitz was a "man for all seasons" when Eisner approached him in 1994 about replacing President and Chief Operating Officer Frank Wells, who had died in a helicopter accident on Easter Sunday of that year. At the time, Ovitz had a reputation as a top agent, had ventured into investment banking and advertising and was successful in real estate, Eisner said. "He was really impressive," Eisner said.
However, Ovitz wanted to be co-chief executive and have parity in terms of compensation with Eisner — something that ultimately wouldn't work, Eisner said. Talks broke down and weren't revived until a little less than a year later when Ovitz was discussing a deal to sell Creative Artists Agency to MCA/Universal, Eisner said.
The two eventually agreed on a deal in the summer of 1995 as they vacationed in Aspen, Colo. Eisner said he was aware of the terms that were being discussed by Ovitz's representatives with Irwin Russell and Raymond Watson, two members of Disney's compensation committee who were negotiating the deal.
Eisner said his philosophy was to keep the board of directors constantly informed about goings-on at Disney, just as he had kept his superiors in the loop over the years in the entertainment business.
"Anything that could be in a newspaper article — which today could be almost anything — I would make sure I let the board know about it," Eisner said.
Before Eisner's testimony, Roy E. Disney, a former Disney director, testified that Eisner first "fretted" to him in early 1996 that Michael Ovitz wasn't working out as the company's president.
However, Roy E. Disney, the son of the late Roy O. Disney, one of the entertainment giant's co-founders, said he had an inkling as early as three weeks after Ovitz joined the company in October 1995 that there might be some tension in the executive suite.
Roy E. Disney described a management luncheon in late October 1995 in which Ovitz showed up about 15 minutes late — the lunches in Eisner's tenure had begun promptly at noon — and conversation in the room turned to dead silence when Ovitz burst in.
The "body language" of several executives in the room gave him an impression there was tension about Ovitz, Roy E. Disney said.
From wire reports
GEORGETOWN, Del. — Walt Disney Co. (DIS) Chief Executive Michael Eisner on Monday played down his friendship with former Disney President Michael Ovitz, whose brief and tumultuous tenure as president of the company has landed both men at the center of a shareholder trial.
In his first day of testimony at the civil trial, Eisner, wearing a light green tie dotted with black Mickey Mouse ears, defended the decision to hire Ovitz, but offered a much different view of their relationship than is often reported. (Related: Disney lawsuit could ripple through Corporate America)
Eisner said Ovitz was someone who was "fun to go to dinner with," but balked at describing the one-time top talent agent as his best friend when he joined Disney in 1995. Eisner instead said he was a "good friend" and a "reasonable friend" to Ovitz.
"Michael Ovitz had a lot of best friends," Eisner said. Michael Ovitz was — is — a salesman — and we all deal in hyperbole."
He then added: "I was amused by him. He was one of my friends."
Ovitz, Eisner and several current or former directors are being sued in the Delaware Court of Chancery over a $140 million severance package paid to Ovitz when he left Disney after 14 months as the company's president.
In bringing their lawsuit, shareholders charge that Eisner engineered the deal to hire Ovitz, who was a powerful Hollywood talent agent and founder of Creative Artists Agency, without fully consulting the board.
They also charge that Eisner let his friendship with Ovitz cloud his judgment 14 months later when Ovitz was granted a no-fault termination rather than fired. With the no-fault termination, Ovitz was allowed to walk away from Disney with a $140 million severance package.
Shareholders want that severance package returned.
The lawsuit also charges 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 the no-fault termination.
Eisner said Ovitz was a "man for all seasons" when Eisner approached him in 1994 about replacing President and Chief Operating Officer Frank Wells, who had died in a helicopter accident on Easter Sunday of that year. At the time, Ovitz had a reputation as a top agent, had ventured into investment banking and advertising and was successful in real estate, Eisner said. "He was really impressive," Eisner said.
However, Ovitz wanted to be co-chief executive and have parity in terms of compensation with Eisner — something that ultimately wouldn't work, Eisner said. Talks broke down and weren't revived until a little less than a year later when Ovitz was discussing a deal to sell Creative Artists Agency to MCA/Universal, Eisner said.
The two eventually agreed on a deal in the summer of 1995 as they vacationed in Aspen, Colo. Eisner said he was aware of the terms that were being discussed by Ovitz's representatives with Irwin Russell and Raymond Watson, two members of Disney's compensation committee who were negotiating the deal.
Eisner said his philosophy was to keep the board of directors constantly informed about goings-on at Disney, just as he had kept his superiors in the loop over the years in the entertainment business.
"Anything that could be in a newspaper article — which today could be almost anything — I would make sure I let the board know about it," Eisner said.
Before Eisner's testimony, Roy E. Disney, a former Disney director, testified that Eisner first "fretted" to him in early 1996 that Michael Ovitz wasn't working out as the company's president.
However, Roy E. Disney, the son of the late Roy O. Disney, one of the entertainment giant's co-founders, said he had an inkling as early as three weeks after Ovitz joined the company in October 1995 that there might be some tension in the executive suite.
Roy E. Disney described a management luncheon in late October 1995 in which Ovitz showed up about 15 minutes late — the lunches in Eisner's tenure had begun promptly at noon — and conversation in the room turned to dead silence when Ovitz burst in.
The "body language" of several executives in the room gave him an impression there was tension about Ovitz, Roy E. Disney said.