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Mouse’s trial by ire

Holiday recess begins following Stern words

NEW YORK — The main chapter in the tell-all Disney shareholder trial came to a close Monday after nearly eight weeks in a small Delaware courthouse.

A parade of current and former top Disney execs and board members provided a string of anecdotes, chuckles and endless fodder for gossip that all proved surprisingly anticlimactic: Michael Ovitz was sacked because he was disliked and didn’t mesh with the “Disney culture” invoked by a number of witnesses — CEO Michael Eisner included. Despite frequent references to lying, no major whoppers were uncovered.

Pretrial hype of multimillion-dollar office renovations and lavish gifts were defused early on by the same people who wanted Ovitz out.

“Michael’s short tenure at Disney has been scrutinized as closely as any corporate executive’s in history. They’ve gone over it trip by trip, expense by expense. Every meal, magazine subscription. His home projection equipment, every interaction with a junior person … They looked at his daughter’s bat-mitzvah. At his conduct at Eisner’s mother’s funeral. I believe I was there when he was blamed for the cooling of relations between the U.S. and China,” said Ovitz’s counsel James Ellis.

The board’s role, also at issue in the trial, is more of a gray area. Certainly, most directors weren’t aggressively curious or demanding. But the CEO has wide latitude in hiring and firing.

Central casting couldn’t have turned out a more proper and prickly final witness than former Disney board member and world-renowned architect Robert A.M. Stern, who runs his own firm in addition to serving as dean of Yale’s School of Architecture. He testified Monday that he warned Eisner during an August 1995 phone call about the inherent pitfalls of hiring a close friend like Ovitz.

“I pointed out to Mr. Eisner that sometimes good friends didn’t always work out as close business partners. They were both very strong personalities … and so on. He said he felt comfortable going forward,” Stern testified, adding that he himself was convinced Ovitz was a brilliant pick.

Stern, whose firm has designed several projects for Disney, said the board of directors realized it would be quite expensive to hire Ovitz, given his superagent status. Like other witnesses, Stern said the full board never voted on the terms of Ovitz’s termination agreement in December 1996 but that this wasn’t the job of the board. He said, as did other witnesses, that the terms of the severance package were included in Ovitz’s initial contract, which was approved by the board’s compensation committee.

“I believed the cost we would incur in no longer having Mr. Ovitz was a wise investment given the fundamental destructiveness of the situation … destructive to the core values of the company and to the day-to-day operations of the company,” Stern said.

Eisner ‘famously cheap’

“Mr. Eisner is famously cheap with the buck, in fact, in being famously cheap. He would never given away money … if he could avoid it,” Stern said.

Stern said the first complaint raised about Ovitz regarded his temper.

“Mr. Ovitz was from time to time a little harsh on employees, particularly lower-level employees. He tended to treat them as though they were working for him and not the Walt Disney Co.,” Stern testified. “That was the first wind of controversy. … Later came the fact that he was having trouble with other executives.”

Regarding Ovitz’s habit of giving gifts, “There was a large cadre of Ovitz assistants, including a ‘gifts person,’ which raised certain bells of controversy in the company,” Stern said.

Earlier Monday, longtime former Disney board member Raymond Watson recounted Eisner telling him in the fall of 1996 that Disney would save a “bundle” if Ovitz took a job at Sony. That way, Disney wouldn’t have to pay the severance package.

More memory lapses

Shareholder attorney Seth Rigrodsky pressed Watson, who played a key role in drafting the terms of Ovitz’s lucrative contract, as to whether he shared those terms with other board members. Watson, who retired from the board in March, said he didn’t recall.

At one point, Rigrodsky’s nerves frayed when Watson said he couldn’t recall an October 1996 memo from Michael Eisner stating that Eisner was losing confidence in Ovitz.

“I know you are suffering from a cold. Are you under the influence of any kind of medication?” Rigrodsky said.

“I don’t think cough drops would do anything,” answered Watson.

In January, the court will call several expert witnesses and file written summations. The judge is likely to take several months to return a verdict.

(Willa Paskin contributed to this report.)

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