Has Michael Eisner painted himself into a corner?
The legal tussle of teed-off stockholders vs. the Walt Disney board is entering its fourth week in a Delaware court, and the clock is ticking for witness Eisner.
At some point in the next several weeks, the Mouse chief will take the stand to defend the process by which former Disney president Michael Ovitz was hired and fired in 14 months, walking away with $140 million.
Shareholders think Ovitz’s generous contract was a slapdash rubber stamp by a board that neglected its duty to the company and shareholders.
Since Eisner himself in memos and letters called Ovitz a lying, suicidal psychopath, plaintiffs say the former uber-agent could have been fired for cause — and for free.
Will Eisner claim those memos are fakes?
He’s “walking a tightrope,” says Lynn Stout, an attorney and professor of corporate law at UCLA. He has to say Ovitz was “not a good CEO to justify letting him go, but can’t make him look so bad that it appears he should have been fired for cause.”
“Eisner is damned if he does, damned if he doesn’t,” she adds.
The process is key — how the board and Eisner determined Ovitz should land his golden parachute. They must prove it wasn’t just a fast and easy out.
“How good was the decision-making process? Did they ask for information? Did they ask questions? Did they take their time and test to make sure?” Stout asks.
It’s a delicious irony that Eisner’s archenemies Roy Disney and Stanley Gold, who were on the board at the time, must back his assertions that all Ovitz matters received the utmost scrutiny.
The duo has often slammed the board publicly for being incompetent Eisner patsies.