An alleged secret plot to undermine Jeffrey Katzenberg’s claim to his bonus was unveiled Wednesday in the $250 million lawsuit the former studio chieftain has brought against his old Disney bosses.
Before resting his case at the end of the day, Katzenberg’s chief counsel Bert Fields and his team read depositions from Disney execs about an effort, dubbed “Project Snowball,” to track money owed Katzenberg under a bonus plan. The project, they say, was kept secret from Katzenberg in case the money ever became a bone of contention.
Katzenberg contends “Project Snowball” was a plan to try to cheat him out of his 2% bonus once Disney realized how valuable it was.
Disney attorneys, led by Lou Meisinger, claim Katzenberg forfeited the bonus when he left the studio in 1994 and subsequently helped found the DreamWorks film studio. They also insist there was never an attempt to cover up “Project Snowball.”
With Katzenberg’s lawyers resting their case Wednesday, Disney attorneys are expected to call a handful of witnesses Thursday.
A former Disney employee testified Wednesday that she “briefed” Eisner on a memo that set out various termination scenarios for Katzenberg and the effect they would have on his 2% post-termination bonus.
In sometimes dramatic testimony Tuesday, Eisner had testified that he had never seen the memo, which shows that it was prepared by former Disney president Frank Wells and sent to Eisner in March 1993.
Throughout the seven days of the trial, Fields has claimed that Disney’s withholding of the bonus was due solely to “personal animus” of Eisner toward Katzenberg, and that Eisner indeed knew about “Project Snowball.”
On Wednesday, portions of the deposition of former Disney exec Cheryl Fellows were read, where she stated she had a meeting with Eisner to review “Project Snowball.”
Purporting to show what Katzenberg would receive “under various termination scenarios,” the 1993 Wells memo states that bonus projections are based on a 5-year plan projecting “a continuation of phenomenal growth.”
Under one scenario, where Katzenberg terminates in 1994 but is paid the 2% bonus, Wells and his team valued the whole exit package at a mere $32 million.
This scenario as described in the Wells memo to Eisner comes with the caveat: “Although he is not entitled to any post-termination bonus if the contract expires in 1994, we thought you (Eisner) might be interested in what the amount would be.”
Katzenberg’s attorneys also read into the court record a deposition on “Project Snowball” from Timothy Wolf, a former senior financial officer at Disney, who claimed Wells, now deceased, told him “to crunch the numbers … and keep it to (himself).”
Documents and testimony show that “Project Snowball” went into effect in 1990. It has been a matter of much dispute when Katzenberg learned that Disney’s position was he forfeited the bonus if he left in 1994.
If Disney concludes its case Thursday, closing arguments would be scheduled for Monday. Retired L.A. Superior Court Judge Paul Breckenridge will then render an opinion on what elements, such as merchandising and music, are to be considered for valuation of the bonus.
In Phase IIB experts will project the income derived from the products in perpetuity, and Phase IIC is the valuation portion of the case. Phase I of the case, the liability issue, was resolved by settlement in 1997.