Walt Disney Co. Chief Executive Michael Eisner testified Thursday that he told Disney’s directors he was hoping to “trade” president Michael Ovitz to Sony Corp. on the same day he told a national television audience that he would hire Ovitz again.
In his fourth day on the stand, Eisner said he had met with directors on Sept. 30, 1996, during a celebration of Walt Disney World’s 25th anniversary, and told them he wanted Ovitz to leave Disney and was hoping Sony would hire him. If Ovitz went to Sony, that would have ended Disney’s obligation to pay $140 million in severance.
That same day, Eisner, in response to a question by CNN anchor Larry King, said he would hire Ovitz again and that reports of discord in Disney’s executive suite were “baloney.”
Eisner admitted Thursday that he wasn’t completely candid about his deteriorating relationship with Ovitz, but felt it was in the best interest of the company not to make that knowledge public until an ultimate decision on Ovitz’s fate was made.
“It was certainly a dumb thing to do,” said Eisner, of appearing on “Larry King Live” at the time. “It was unfortunate and stupid and I wish we hadn’t done it.”
Ovitz, Eisner and several current or former directors are being sued in the Delaware Court of Chancery over the massive severance package paid to Ovitz when he left Disney in December 1996, after 14 months as president.
The shareholder lawsuit claims Disney’s board failed in its fiscal responsibilities by not properly scrutinizing Ovitz’s employment contract when he joined the company and then granting him a nonfault termination that entitled him to the massive severance package. How much the board of directors knew about Ovitz’s employment agreement and when is a key issue in the case.
Under questioning by Steven G. Schulman, a lawyer for the shareholders group, Eisner said he expected the Sept. 30, 1996, discussions with directors wouldn’t get back to Ovitz, who was also at Disney World that weekend.
“If you can’t have a conversation with your board that’s confidential, you can’t do any business,” Eisner said.
Eisner said he also believes he discussed Ovitz’s situation with directors individually during quieter moments at the weekend celebration, including at lunches and over drinks.
He noted that Fr. Leo J. O’Donovan, a Jesuit priest, was concerned to learn at his first meeting as a Disney director that the company was thinking about firing its president.