Ending a bitter Hollywood breakup saga, the Walt Disney Co. and Jeffrey Katzenberg have settled a contract lawsuit filed by the former studio chief claiming Disney owed him hundreds of millions of dollars in bonus payments, both sides announced today.
Terms of the deal weren't disclosed. But Katzenberg had estimated his bonus at between $342 million and $580 million. Disney calculated the bonus at $119 million to $153 million. Part of the disputed money, reportedly more than $100 million, has already been paid in a partial settlement.
Whatever the final number, both sides expressed satisfaction with the deal.
"I am glad that we were able to come to an acceptable settlement," Disney Chairman Michael Eisner said in a statement, adding, "the time has come to put this matter behind us."
Katzenberg praised his legal team and said, "I am very pleased that we were able to finally resolve this matter."
The settlement was reached on the day Katzenberg's legal team was expected to rest its case, setting the stage for Disney to present its evidence.
Katzenberg, who left his post of studio chief at Disney in 1994 after he was denied a promotion, filed suit claiming the company owed him a 2 percent bonus for future profits of all films produced during his 10-year tenure, including "Sister Act" and "The Lion King." He also sought profits from merchandise generated during his Disney decade.
Disney had argued that Katzenberg forfeited that bonus because he left two years before the end of his six-year contract. Katzenberg went on to become one of the founders of DreamWorks SKG with Steven Spielberg and David Geffen.
Both sides reached the partial settlement two years ago and agreed to proceed to a second phase to determine which products fell under the terms of the bonus and the final dollar amount. Terms of that deal were sealed, but sources have said Katzenberg was given two sums: $77.5 million, which was to be deducted from the final settlement, and another $40 million, which would not be subtracted.
Midway into the second phase, retired Superior Court Judge Paul Breckenridge Jr. ruled on May 19 that Disney did in fact breach its contract, an important legal finding because it meant the company owed Katzenberg a potentially huge interest payment in addition to the bonus.
The lawsuit has proven to be not only expensive for Disney, but a major embarrassment, as the bad blood between Eisner and Katzenberg became painfully public. Observers have long wondered why a deal wasn't reached much sooner.
The final settlement announced today spares the company from at least one more potential nightmare: Eisner won't have to take the stand for a second time as a hostile witness for Katzenberg. Eisner was going to appear out of order during the Disney case because of scheduling issues.
The first time Eisner testified in May, it was a public relations disaster for Disney. Proving to be a prickly witness, Eisner had to acknowledge that he probably once said of the diminutive Katzenberg, "I hate the little midget."
CAPTION: Jeffrey Katzenberg: "Pleased" that the dispute was resolved.