A Delaware chancery judge found that Disney's top executives and directors did a poor job handling the hiring and firing of super-agent Michael S. Ovitz as chief operating officer, but not so poor that they were negligent and liable for the $140 million severance payment. Corporate governance experts said the decision nonetheless raises the legal standards by which directors will now be judged. In the 175-page opinion, the judge described Disney chief executive Michael D. Eisner as "Machiavellian" and the Disney board as stacked with overly deferential directors.
Icahn's Latest Prey
Corporate raider Carl Icahn, who made a fortune buying stakes in poorly performing companies and pressuring managers to increase share prices, has found a new target: Time Warner. His and other hedge funds have purchased more than 5 percent of its stock, according to media reports. Icahn and his allies are pushing Time Warner to announce an enlarged stock buyback program and consider spinning off its cable division and America Online. If management refuses, Icahn could launch a proxy battle to gain seats on Time Warner's board of directors -- as he recently did with Blockbuster.
Delphi Dark Forecast
Auto parts giant Delphi warned its unions and General Motors, its biggest customer and former corporate parent, that it would file for bankruptcy protection if it didn't get help in cutting costs. The company also said it lost $338 million last quarter. Delphi blamed overly thin margins, declining orders and uncompetitive labor costs for its problems, echoing similar comments from its Ford-dependent rival, Visteon, which is also facing a massive restructuring. A Delphi bankruptcy filing could fall heavily on GM, which may be liable for some of the parts maker's pension obligations.
Former WorldCom chief financial officer Scott D. Sullivan was sentenced to five years in prison for his role in the $11 billion accounting fraud that drove the telecommunications giant into bankruptcy. The relatively short sentence -- he could have received 25 years -- was the result of his cooperation with prosecutors and his week-long testimony that helped convict former boss Bernard J. Ebbers. The judge described Sullivan as a "detailed" and "candid" witness. Proceeds from the sale of his mansion in Boca Raton, Fla., will be turned over to former shareholders.
State of the Estate Tax
With Democrats blocking outright repeal of the inheritance tax, Republicans and their supporters are split on how to reduce it. Lobbyists for the super-rich favor a plan to reduce the tax rate to 15 percent from 47 percent. Small business groups are more interested in exempting the first $10 million of any estate from taxation, which would leave only several hundred families paying the tax each year. Without any changes, the inheritance tax would raise about $75 billion a year during the next decade. In 2003, the tax affected only 28,600 of the 2.4 million adults who died that year.