Very interesting Eisner vs. Ovitz letter

[mrtoadslastride]

The article is very long, but provides some very interesting insights on this situation and the way Eisner likes to manage the company. For example, in the letter to Ovitz Eisner complains of Ovitz's perks and stepping on the "small people".


Link

 

[daber]

From The Five Dumbest Things On Wall Street this Week:
"Some choice allegations from the filing:

Ovitz submitted expense reports for business entertainment that occurred prior to his appointment as president by Disney's board. The day of his appointment, he hosted a party at his home honoring the artist Chuck Close. Disney footed the bill.

While at Disney, Ovitz received at least $27.9 million in commission income from clients represented by his former employer, the talent agency CAA.

In Ovitz's 15 months at Disney, he ran up $6.3 million in business expenses.

Ovitz renovated his office at a cost of $2 million.

Upon his departure in 1996, Ovitz received a $7.5 million bonus. Days before awarding that money, a director noted on a relevant document "bonus if does a good job and keeps mouth shut."
So when will someone start paying us to keep our mouths shut? We promise: We're much cheaper to buy off than Ovitz. "

IMHO reading what Mr. Ovitz charged to the company, or tried to charge the company (a bat mitzpah) sounded more like the Tyco and Adelphia type of stuff. Now that this is out in the open, I wonder if we should expect another shareholders suit and possible criminal charges. Also make you stop and think that if ME knew about this and allowed it, what has he been charging to the company?

 

[Luv2Roam]

http://www.orlandosentinel.com/busi...feb28,0,5762791.story?coll=orl-home-headlines

Court documents bad news for Eisner

By Michael Cieply and James Bates | Los Angeles Times
Posted February 28, 2004

Just five weeks after hiring Hollywood power agent Michael Ovitz as president of Walt Disney Co. in 1995, Chairman Michael Eisner believed his friend should be fired.

But he hesitated out of fear that Ovitz would commit suicide.

That version of events is contained in hundreds of pages of newly unsealed court documents detailing the stormy partnership between two of the most influential figures in Hollywood during the past 20 years.

The documents, filed in connection with a Delaware shareholder suit against Disney's board of directors, provide a particularly unflattering view of Ovitz, whose stratospheric spending was high even by Hollywood standards. During the 15 months he worked at Disney, Ovitz burned through $6 million on personal expenses, according to the records.

But it's Eisner who stands to lose the most from the release of the documents.

Their emergence comes at a particularly inopportune time for the Disney chairman, who at next week's annual meeting faces a challenge by some shareholders to force him from the board.

The Delaware documents resurrect issues now being used to criticize Eisner's judgment and leadership of Disney. Shareholder advisory firm Glass Lewis & Co., for one, cited the legal papers in concluding that Eisner "failed to respect fully the separation of the company's interests from his own and those of his friends and personal business partners."

The release of the court papers was coincidental and not timed to influence the shareholder vote. Indeed, two of the defendants -- former directors Roy E. Disney and Stanley P. Gold -- are now spearheading the anti-Eisner campaign.

Ovitz didn't respond to a request for comment and a Disney spokesman would not comment. In a legal challenge filed Friday, however, lawyers for Disney directors attacked as "one-sided" and "seriously flawed" one key filing: a report by Deborah A. DeMott, a Duke University law professor retained by the plaintiffs' attorneys as an expert witness.

In her report, DeMott said Eisner decided to hire Ovitz as Disney president before consulting the company's board of directors. The two men decided that Ovitz should join Disney during an August 1995 hike in Aspen, Colo. Without waiting for board approval, DeMott said, remodeling began on Ovitz's future office and appraisals were sought for his corporate jet. The board signed off in late September.

Ovitz rose to overriding power in Hollywood during the 1980s, when he and his Creative Artists Agency dominated the film business with a roster of top stars and directors. After brokering such high-profile corporate deals as the sale of MCA Inc. to Matsu****a, he abandoned the agency and became Eisner's understudy at Disney.

But the partnership between the two strong-willed men went downhill quickly, leading to a controversial cash-and-stock severance package valued at nearly $100 million when Ovitz left.

A specially commissioned review of Ovitz's expenses was quietly carried out after his departure. Dubbed "Project MSO" -- for Ovitz's initials -- it uncovered a level of spending that infuriated Disney executives.

Ovitz, according to the study by an independent accountant, racked up more than $2 million to remodel his office. At one point, he and his decorator proposed changes to its millwork. The tab: $150,000.

Although the office remodel was Ovitz's biggest expense, it wasn't his only capital improvement. Disney also spent $48,305 on Ovitz's home screening room and $14,055 on his home office. To ensure that Ovitz motored in style, the company plunked down $99,135 to buy Ovitz's BMW from his former employer.

Questions about Ovitz's emotional stability are a central point in the report. Based on a deposition from Disney investor Sid Bass, DeMott wrote that Eisner considered firing Ovitz after five weeks. But he didn't "because he believed being fired would be devastating emotionally to Mr. Ovitz. Instead, he decided he should wait twelve months before bringing Mr. Ovitz's employment to an end."

The report continued: "More specifically, Mr. Eisner believed that, if fired, Mr. Ovitz would commit suicide."

DeMott said Bass opposed Ovitz's hiring. Eisner supposedly told Bass he also "harbored doubts" about Ovitz's suitability from the beginning.

A key issue, according to DeMott, was the agent's "veracity." The law professor said Bass testified in the deposition that Ovitz had made a false statement to him "the first time they met."

By late 1996, Eisner apparently tired of what he regarded as Ovitz's manipulation. "You played the angles too much, exaggerated the truth too far, manipulated me and other too much," he wrote in a November letter suggesting that Ovitz resign.

Around that time, Eisner and Ovitz had a final encounter in New York to work out Ovitz's exit, according to DeMott's report. On Dec. 27, 1996, Disney officially declared Ovitz gone.

Michael Cieply and James Bates are reporters for the Los Angeles Times, a Tribune Publishing newspaper.