A judge ruled that Walt Disney’s board did not breach its duties in awarding a $ million severance package to Michael Ovitz. Delaware Chancellor William B Chandler III rules that Walt Disney “We always believed that there was no basis for this case,” he added. But this case was never really about money–even a worst-case scenario wouldn’t have done much damage to The Walt Disney Co., not when.

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Michael Ovitz and The Walt Disney Company (A)

Sources on directors’ duties. Technology and Operations Management. Uniform format for every case brief. In Hollywood, the trial’s webcast turned into popular entertainment, showcasing one of the most embarrassing episodes in the careers of two men who were once among the industry’s most powerful and feared executives.

The operation could not be completed. What to do next… Unlock this case brief with a free no-commitment trial membership of Quimbee. Tumas and Mark A. Within a year Ovitz lost Eisner’s confidence and oviitz his contract though it was certainly not gross negligence. Shareholders brought a derivative suit. Chandler’s decision ended what he called “something of a public spectacle.

His scores make his case. Pepper v Litton US Finance Globalization Health Care. Delaware Supreme Court A. In re The Walt Disney Co.

Views Read Edit View history. The compensation committee here was provided with a term sheet for all the key points of the employment contract.


Overshadowing the legal arguments at the trial was often dramatic testimony detailing the unraveling of a friendship between two of the entertainment industry’s best-known figures. Ovitz insisted his pay would go up if things went well, and an exit package if things did not.

To counter that, gross negligence or bad faith must be shown. Although the judge ruled in favor of the directors, shareholder activists did not view the decision as a defeat, noting Chandler’s criticism of how the board handled the Ovitz matter. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students.

The opinion can be simplified into six main holdings: Srinivasan, Suraj, Jay W. Lorsch, Jay, and Emily Irving.

They acted in a manner that they believed was in the best interests of the company. The right length ovits amount of information – includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents.

To protect the interests of the corporation and its shareholders, fiduciary conduct of this kind, which does not involve disloyalty as traditionally defined but is qualitatively more culpable than gross negligence, should be proscribed. The Supreme Court also adopted the same practical view as the Court of Chancery regarding the important statutory protections offered by Section e of the DGCL, which permits corporate directors to rely in good faith on information provided by fellow directors, board committees, officers, and outside consultants.

Judge Rules in Favor of Disney in Ovitz Case but Criticizes Eisner – latimes

The contract was for five years, but if Ovitz were terminated without cause, he would be paid the remaining value of his contract as well as a significant severance package in the form of stock option payouts. Chancellor Chandler noted that the case could only rest on gross negligence, which means ‘reckless indifference to or a deliberate disregard of the disnry body of stockholders’ or actions ovits are ‘without the bounds of reason’.


It was in good faith, with a subjective belief that he was right and in the company’s best interests. Fase Jacobs of the Delaware Supreme Court wrote the opinion. Lorsch, and Quinn Pitcher. TransUnion’s senior management completely opposed the merger, but here everyone saw hiring Ovitz as a ‘boon for the Company’.

Finance General Management Marketing. Written by law professors and practitionersnot other law students. Cases have arisen where corporate directors have no conflicting self-interest in a decision, yet engage in misconduct that is more culpable than casd inattention or failure to be informed of all facts material to the decision.

Business and Environment Business History Entrepreneurship. Reliable – written by law professors and practitioners not other law students.

Guth v Loft Inc. United States corporate case law Delaware state case law in United States case law in Delaware Disney litigation.

Chandler’s decision reinforced directors’ rights to make decisions — even bad ones — if done in good faith.