Lawyers for plaintiffs in a shareholder suit over Michael S. Ovitz's $140 million severance package from the Walt Disney Co. suggested on Wednesday that Disney chief executive Michael D. Eisner may have viewed his former protege as threatening.
During an often contentious cross-examination of Eisner that began Wednesday, plaintiffs' attorney Steven G. Schulman referred to notes Eisner took during a conversation with Disney director Gary L. Wilson around Thanksgiving in 1996.
Wilson had been on a Caribbean cruise with Ovitz during the Thanksgiving holiday and had informed the Disney president that he would have to leave the company after just 14 months on the job.
In his notes, Eisner wrote that Wilson described Ovitz as "dangerous" and behaving like a "caged animal."
Schulman asked Eisner, "Were you concerned that Mr. Ovitz had some way to harm you personally?"
Eisner replied that he did not believe Ovitz posed any threat to him.
The line of questioning appeared to open a new line of attack for the plaintiffs, who claim that Eisner and other Disney directors failed in their fiduciary duty to investors by not properly considering the merits of Ovitz's hiring and then allowing him to leave with a no-fault termination entitling him to the $140 million severance package.
A person close to Eisner's defense team who asked not to be identified by name because the case is ongoing described the questions about a possible threat from Ovitz as baseless. A spokesman for Ovitz declined to comment.
The plaintiffs, who are asking directors to return the $140 million plus about $60 million in interest to Disney, say Ovitz was a disaster as president and could have been fired for cause, which would have negated much of the severance.
Schulman on Wednesday challenged Eisner on his earlier testimony about a Nov. 25, 1996, executive session of the Disney board. Eisner has testified that non-management directors agreed at the meeting on the basic terms of Ovitz's termination package. Eisner said that no minutes exist from the meeting and that neither the non-management directors nor the full board ever adopted a resolution formally granting Ovitz a no-fault termination.
Eisner also testified that he relied on advice from Sanford M. Litvack, then Disney's chief of corporate operations and top legal adviser, that Ovitz could not be fired for cause. "This was not a gray area. It was cut and dried from day one and I accepted that," he said under questioning.
Eisner acknowledged that Litvack disliked Ovitz and wanted him out of the company. But he denied that Litvack had a conflict of interest, saying if Litvack could have denied Ovitz the $140 million package, he would have. Eisner said Litvack received confirmation from outside legal counsel that there were no grounds to terminate Ovitz with cause. However, Eisner said he never saw any documentation of the outside legal opinion and could not recall what law firm provided it.
Schulman also questioned Eisner about a Dec. 16, 1996, e-mail he wrote to John Dreyer, then Disney's head of public relations, in which he called Ovitz a "psychopath" and "incompetent." Schulman suggested Eisner might have held those opinions during much of Ovitz's tenure at the company.
Eisner replied that the e-mail contained "hyperbole" and stemmed from anger over his belief that Ovitz had been "spinning" his departure from Disney in the press. "I was venting. I was angry. . . . He did something that I thought was simply somewhat despicable."
Eisner's cross-examination is expected to last the rest of the week.