Ovitz Wants Out

[Sarangel]

Of the shareholder lawsuit against Disney over his severance package.

A Delaware corporate law judge Wednesday heard a plea from attorneys for former Walt Disney Co. president Michael Ovitz that asks to remove Ovitz from the list of defendants in a shareholder suit over his $140 million severance package.

Chancellor William Chandler said he would rule quickly on Ovitz's motion for summary judgment in the long-running case, which is scheduled to go to trial in October in Delaware's Court of Chancery.

Ovitz's attorney, Mark Epstein, told Chandler that Ovitz should not be held to account for alleged failings in the corporate process that led to his being hired and let go 14 months later with the severance package that triggered the lawsuit.

Ovitz, the former chief of Creative Artists Agency Inc., was hired as Disney's president on Oct. 1, 1995, and left in December 1996 under "no-fault" terms that allowed him to collect the $140 million package.

Epstein said other executives and directors were involved in the decisions to bring Ovitz on board and to allow him to make a graceful exit, not just Disney chief executive Michael Eisner, his close friend.

Attorneys for shareholders say the two friends negotiated key terms of Ovitz's coming and going in private sessions, including a final meeting at Eisner's mother's apartment at the Pierre Hotel in New York.

Shareholders allege the board abdicated its responsibility to see that Ovitz's contract and severance payments were reasonable and fair to the company, and that he, as a director, breached his fiduciary duty in profiting from his short and reportedly stormy tenure at Disney, the entertainment giant based in Burbank, Calif.

"Friendship has never been enough to constitute a breach of fiduciary duty," Epstein argued.