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o fuidiivfia 111
Eugene to serve you:
• 555 High St, 344-2115
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• 1880 W.IHh, 683-8284
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• 705 S. Seneca, 345-8036
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• 2345 West Broadway, 284-5024
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• 201 Division Ave., 762-7837
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I * 1175 Highway 99,607-4541
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Judge finds Disney short
of 'ideal' in superagent case
THE ASSOCIATED PRESS
WILMINGTON, Del. — While
The Walt Disney Co. CEO’s “lapses
were many,” and its embattled pres
ident left the entertainment con
glomerate with a $140 million sev
erance package, a court ruled that
Disney board members did not vio
late their duties or waste company
resources in the hiring and firing of
former Hollywood superagent
Michael Ovitz.
The Disney board did not breach
its fiscal responsibilities by agreeing
to hire Ovitz as president in 1995,
then granting him the hefty sever
ance just 14 months later.
The ruling closes the trial phase
of a shareholder lawsuit that re
vealed the tempestuous inner work
ings of one of the world’s largest en
tertainment companies.
TTial testimony included details
of the enmity Ovitz engendered
among fellow Disney executives,
including CEO Michael Eisner,
who described Ovitz in company
memos as a “psychopath” with a
“character problem.”
Ovitz contended that he loved
Eisner “like a brother” but was
micromanaged, undermined by
other key executives and “cut out
like cancer” before he had time to
prove his worth. Disney executives
said Ovitz wasted money, alienated
executives with his arrogance
and could not be trusted
during his tenure at the Burbank,
Calif.-based company.
Chancellor William Chandler III
said that while the directors’ con
duct “fell significantly short of the
best practices of ideal corporate
governance,” board members did
not violate their duties or waste
Disney resources.
“It is easy, of course, to fault a de
cision that ends in failure, once
hindsight makes the result of that
decision plain to see. But the i
essence of business is risk — the ap
plication of informed belief to con- i
tingencies whose outcomes can
sometimes be predicted, but never
known,” Chandler wrote in a ]
175-page decision.
Attorneys for the plaintiffs said :
they will appeal Chandler’s decision
to the Delaware Supreme Court. i
"It would be unfortunate for 1
shareholders and employees of pub
lic companies if this decision is read 1
by corporate managers as a license i
to act in disregard of their duties to
engage in the deliberate processes :
required by fiduciaries,” said
Melvyn Weiss, a partner with Mil- 1
berg Weiss Bershad & Schulman. :
Ovitz’s attorney, Mark 1
Epstein, said his client was 1
“extremely pleased,” and that he is i
confident the decision will be up
held on appeal.
“According to the court, there <
were no improprieties regarding 1
honesty, expenses, gift giving; t
he just dismissed without merit 1
all of those allegations,” Epstein
said. "... I think the chancellor’s de
cision with regard to Mr. Ovitz is :
rock solid.” 1
The lawsuit claimed that current i
and former members of Disney’s 1
board did not properly scrutinize 1
Ovitz’s employment contract after <
Eisner tapped him as president,
then wrongly granted Ovitz a non- <
fault termination entitling him to a
$140 million severance package just
more than one year later. ]
Lawyers for the shareholders al
eged that Ovitz’s performance was
>o poor that he should have been
ired for cause and not paid the re
nainder of his contract. The defen
iants, including Eisner and Ovitz,
said Ovitz’s contract was given
:areful consideration, and that
vhile Ovitz’s tenure was stormy
:rom the start, there was no gross
legligence or malfeasance that
vould justify denying him his
severance package.
While ruling for plaintiffs,
Chandler chided Eisner — who
eaves as CEO next month — for not
idequately involving the board in
msiness matters and having “en
hroned himself as the omnipotent
md infallible monarch of his per
sonal Magic Kingdom.”
“His lapses were many. He failed
o keep the board as informed as he
should have. He stretched the outer
loundaries of his authority as CEO
)y acting without specific board di
ection or involvement,” the judge
vrote. “Eisner’s failure to better in
volve the board in the process of
Dvitz’s hiring, usurping that role for
limself, although not in violation of
he law, does not comport with how
iduciaries of Delaware corporations
ire expected to act.”
Eisner’s attorney, Gary Naftalis,
said the CEO was “very pleased that
he court, after hearing all the testi
nony and seeing the witnesses, has
bund that he and the other direc
ors properly carried out their fidu
:iary duties to the shareholders.
“This was a case where the
evidence didn’t support any claims,
md the judge after hearing it
igreed,” Naftalis said. “We’re
iretty happy.”
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