Watson praises Disney topper's communication skills
NEW YORK — Not even a sweaty turn on the treadmill stopped Walt Disney topper Michael Eisner from phoning his board members and giving them the latest company update — including on the status of Michael Ovitz.
That’s according to former Mouse House board member and chair Raymond Watson, who took the stand Friday in the final days of the Disney shareholder trial. He insisted Eisner was the best exec he’s ever known in terms of keeping the board informed, even when it came to revealing that Ovitz just wasn’t cutting it as prexy.
“He communicates more than anyone. He tells everything, including all the warts,” said Watson, who retired from the Disney board in March. Serving as chair of the conglom in the early 1980s, he conducted the search that installed Eisner and Frank Wells.
Eisner “sent you emails,” said Watson. “He called board members all the time. He would call when I was on the treadmill and he was on the treadmill.”
Watson and former Disney director Ignacio Lozano, who testified earlier Friday, were both members of the board’s compensation committee. Each said the committee did its job in discussing the terms of the lucrative financial package awarded to Ovitz when he was offered the job of Disney prexy in August 1995.
Watson himself played a key role in drawing up the terms of the package, working with board member Irwin Russell and outside consultant Graef “Bud” Crystal.
Lozano and Watson said everyone realized that it would take quite a bit of money to retain Ovitz, who reportedly earned $25 million annually at CAA.
But like other witnesses throughout the trial, Watson often showed selective memory when it came to exactly what he was told by Eisner and other key execs as Ovitz’s tenure began to unravel.
“If somebody doesn’t tell the truth … and who can’t separate truth from fiction, is that someone you want to be the executive of a company?” shareholder attorney Seth Rigrodsky asked.
“I think it’s a broad generality. I don’t know,” said Watson, admitting he never asked to see in writing the reasons why Ovitz was being terminated without cause.
Lozano testified that he didn’t remember whether the entire board discussed all the terms of Ovitz’s pay package, adding that this was the job of the compensation committee, not the full board. In drawing up the package, the compensation committee did talk about what sort of severance Ovitz would get if terminated without cause.
Lozano didn’t remember whether the full board discussed this particular provision when affirming Ovitz’s hire.
Lozano said it would be strange and “very unusual on the day we were hiring him to talk about his termination.”
Rigrodsky pressed Watson on what former Disney general counsel Sanford Litvack told board members in November 1996 regarding the fact that Ovitz would be asked to leave.
“What I recall (Litvack) saying is it didn’t stand to the level of termination with cause,” Watson said.
“And what questions did you ask Litvack?” Rigrodsky said.
“I don’t recall,” Watson replied.
“Did you ask to see anything in writing?” Rigrodsky asked.
“I did not,” Watson said.
Also under cross, Watson said he never followed up as to the specifics of a November 1996 boat trip during which former Disney board member and chief financial officer Gary Wilson told Ovitz it was time for him to leave the company.
“What did you do to follow up on the boat conversation?” Rigrodsky asked.
“I’m not trying to duck around this,” testified Watson, adding that the issue wasn’t the boat trip specifically, but whether Wilson had been successful in his task.
Watson will return to the stand today. Trial, which commenced Oct. 20, is expected to wrap Tuesday. Chancellor William B. Chandler III is expected to deliberate for several months before issuing a ruling.