Ex-Disney Director Says He Was Briefed on Ovitz's Pay
By BLOOMBERG NEWS
Published: November 11, 2004
Michael D. Eisner, the chief executive of Walt Disney, kept board members abreast of the negotiations to hire the talent agent Michael S. Ovitz as the company's president in 1995, a former director, Stanley P. Gold, testified yesterday.
Investors in Disney contend that the company's board deferred too much to Mr. Eisner in connection with Mr. Ovitz's hiring and firing, and are suing to have Mr. Ovitz's $140 million severance package returned to the company.
Mr. Gold, who left Disney's board last year to campaign for the ouster of Mr. Eisner, said Mr. Eisner repeatedly briefed him on the pay package Mr. Ovitz sought in return for joining Disney. Mr. Gold would then brief a fellow director, Roy E. Disney, nephew of the company's founder, about the negotiations, he said. Mr. Gold is an executive at Roy Disney's investment company.
"I felt Mr. Eisner was keeping me in the loop" about the progress of the Ovitz talks, Mr. Gold told Judge William B. Chandler III of Delaware Chancery Court yesterday. "He told me early in the process it was going to cost Disney a lot of money to get Mr. Ovitz."
Investors contend board members did not know that Mr. Ovitz could be entitled to at least $140 million in severance payments if he were forced out of Disney under certain circumstances. They assert that Mr. Ovitz could have been fired without severance pay for poor performance and ethical lapses.
Mr. Eisner fired Mr. Ovitz, who had represented actors like Tom Cruise and Kevin Costner, in December 1996, after he spent just 14 months as the company's president. Mr. Eisner said in a deposition that the firing was necessary because Mr. Ovitz never fully made the transition to corporate executive.
Disney began a search for a new president after the death of Frank G. Wells in 1994, which Mr. Gold said was a "big blow" to the company. Board members considered entertainment executives, including Barry Diller, who is now the chief executive at IAC/InterActiveCorp, and former Senator George J. Mitchell, as successors. Mr. Mitchell now serves as a Disney director.
Other people considered for the Disney post included Bob Daly, the former co-chairman of the Warner Brothers studio and former chairman and chief executive of the Los Angeles Dodgers, and Jeffrey Katzenberg, the former head of Walt Disney Studios, Mr. Gold said.
Mr. Katzenberg is now chief executive of DreamWorks Animation SKG, a spinoff of the DreamWorks SKG studio. DreamWorks Animation raised $700 million in a public stock offering last month.
The board did not give serious consideration to replacing Mr. Wells with Robert A. Iger, president of Disney's ABC television network at the time, Mr. Gold said. Mr. Iger is now Disney's president and has Mr. Eisner's backing to succeed him when he steps down in 2006.
Mr. Eisner told directors in 1995 that "he didn't have a high regard for Iger," because ABC's previous top managers did not have confidence in Mr. Iger's ability to run the network, Mr. Gold testified.
Earlier in the trial, Mr. Ovitz testified that he talked Mr. Eisner out of firing Mr. Iger as part of a management housecleaning at ABC in 1996.
A Disney spokeswoman, Michelle Bergman, declined to comment on Mr. Gold's testimony about Mr. Eisner's 1995 evaluation of Mr. Iger.
By BLOOMBERG NEWS
Published: November 11, 2004
Michael D. Eisner, the chief executive of Walt Disney, kept board members abreast of the negotiations to hire the talent agent Michael S. Ovitz as the company's president in 1995, a former director, Stanley P. Gold, testified yesterday.
Investors in Disney contend that the company's board deferred too much to Mr. Eisner in connection with Mr. Ovitz's hiring and firing, and are suing to have Mr. Ovitz's $140 million severance package returned to the company.
Mr. Gold, who left Disney's board last year to campaign for the ouster of Mr. Eisner, said Mr. Eisner repeatedly briefed him on the pay package Mr. Ovitz sought in return for joining Disney. Mr. Gold would then brief a fellow director, Roy E. Disney, nephew of the company's founder, about the negotiations, he said. Mr. Gold is an executive at Roy Disney's investment company.
"I felt Mr. Eisner was keeping me in the loop" about the progress of the Ovitz talks, Mr. Gold told Judge William B. Chandler III of Delaware Chancery Court yesterday. "He told me early in the process it was going to cost Disney a lot of money to get Mr. Ovitz."
Investors contend board members did not know that Mr. Ovitz could be entitled to at least $140 million in severance payments if he were forced out of Disney under certain circumstances. They assert that Mr. Ovitz could have been fired without severance pay for poor performance and ethical lapses.
Mr. Eisner fired Mr. Ovitz, who had represented actors like Tom Cruise and Kevin Costner, in December 1996, after he spent just 14 months as the company's president. Mr. Eisner said in a deposition that the firing was necessary because Mr. Ovitz never fully made the transition to corporate executive.
Disney began a search for a new president after the death of Frank G. Wells in 1994, which Mr. Gold said was a "big blow" to the company. Board members considered entertainment executives, including Barry Diller, who is now the chief executive at IAC/InterActiveCorp, and former Senator George J. Mitchell, as successors. Mr. Mitchell now serves as a Disney director.
Other people considered for the Disney post included Bob Daly, the former co-chairman of the Warner Brothers studio and former chairman and chief executive of the Los Angeles Dodgers, and Jeffrey Katzenberg, the former head of Walt Disney Studios, Mr. Gold said.
Mr. Katzenberg is now chief executive of DreamWorks Animation SKG, a spinoff of the DreamWorks SKG studio. DreamWorks Animation raised $700 million in a public stock offering last month.
The board did not give serious consideration to replacing Mr. Wells with Robert A. Iger, president of Disney's ABC television network at the time, Mr. Gold said. Mr. Iger is now Disney's president and has Mr. Eisner's backing to succeed him when he steps down in 2006.
Mr. Eisner told directors in 1995 that "he didn't have a high regard for Iger," because ABC's previous top managers did not have confidence in Mr. Iger's ability to run the network, Mr. Gold testified.
Earlier in the trial, Mr. Ovitz testified that he talked Mr. Eisner out of firing Mr. Iger as part of a management housecleaning at ABC in 1996.
A Disney spokeswoman, Michelle Bergman, declined to comment on Mr. Gold's testimony about Mr. Eisner's 1995 evaluation of Mr. Iger.
