WILMINGTON, United States (AFP) - Walt Disney Co. shareholders are to finally get their day in court, seven years after suing the company for allegedly wasting corporate assets by buying out the contract of former president Michael Ovitz for 140 million dollars.
Ovitz, who helped found Creative Artists Agency in 1975 and had earned the title of "The Most Powerful Man in Hollywood," was hired by Disney in October 1995 on a five year contract.
However Ovitz performed so poorly in the 14 months at Disney that he was terminated without cause in December 1996, according to the lawsuit.
The shareholders blame the Disney board of directors for hiring Ovitz without properly scrutinizing his contract or track record.
At the time of his hiring Ovitz had been a successful agent for stars like Dustin Hoffman and Tom Cruise, but also involved in soured deals like Sony's 1989 take over of Columbia Pictures.
In their derivative suit filed on behalf of the company, the shareholders charge Ovitz, Disney chief executive Michael Eisner and the directors with failing to exercise the care and loyalty owed to the company under Delaware corporate law, where the company is incorporated.
They want the Disney defendants to return to the corporation coffers the 140 million dollars in severance paid to Ovitz plus interest -- now an estimated 60 million dollars -- and to pay the plaintiffs' legal fees and expenses.
The trial will take place in Georgetown, Delaware, a rural community with a population 5,000 and a colonial-era center that is surrounded by hectares (acres) of industrial chicken farms.
Georgetown is also the home base for William Chandler III, who will preside over the trial in the Delaware Chancery Court.
The court is rooted in ancient English equity or fairness law, has no jury trials, and is known internationally for having institutionalized US corporate and business law since the late 1800s.
Chandler will issue an opinion at the end of the four-week trial.
Streaming into town and a nearby airfield will be Hollywood moguls and luminaries like Eisner, Ovitz, and Disney directors that include former US senator George Mitchell and actor Sidney Poitier.
Streaming out of town will be a real-time television feed of the trial, available on the Internet to anyone willing to pay 600 dollars a week.
Eisner last month announced plans to resign as Disney chief executive officer in September 2006, yielding after a bitter battle with disgruntled shareholders.
Eisner's leadership sparked a shareholder revolt led by Roy Disney, nephew of the company founder, who blamed the top executive for lackluster performance in recent years. The group was also forced to fight off a hostile bid by US cable group Comcast in April.
Eisner finally won support from the Disney board in May after 43 percent of shareholders voted to oust him, but he was nonetheless replaced as chairman of the board by former senator Mitchell.