GEORGETOWN, United States (AFP) - Disney chief Michael Eisner testified that in his 20 years with the entertainment giant, he has had to make tough decisions and that firing his friend, Michael Ovitz, was just one of them.
"People think because you make fuzzy cute little cartoons, that you are fuzzy and cute, and they try to take advantage of you," Eisner told a court here in his third day of testimony as a defendant in a shareholder suit charging him, Ovitz and Disney's 1995-1996 board of directors with wasting corporate assets.
"And you have to go your own way and you have to be tough in business to be soft in products, and you have got to make sure you understand that, but you make mistakes and you move on," Eisner added, referring to a decision to hire Ovitz as president in 1995, a move he said he began to regret almost immediately.
But under cross-examination by plaintiff's attorney Steven Schulman, Eisner continued to defend his decision just 15 months later to agree to a no-fault termination of Ovitz that allowed him to walk away with a severance package worth 140 million dollars.
Eisner is appearing in Delaware Chancery Court this week before Chancellor William Chandler as the Disney board fends off a lawsuit filed by company shareholders over the Ovitz deal.
The suit, filed in Delaware because Disney is incorporated there, seeks the return to company coffers of the payout to Ovitz, 60 million dollars in interest, plus legal fees and costs. The plaintiffs contend Ovitz should have been fired for gross negligence and forced to leave empty-handed.
Schulman's questioning on Wednesday focused on Eisner's perception of proper corporate governance, the underlying issue in the 1997 lawsuit.
The shareholders contend the defendants failed to investigate Ovitz's qualifications or his employment agreement when he was hired and later to determine independently whether he could have been fired for cause and denied any severance.
Though there was no formal vote of the board to decide a no-fault termination, Eisner said "no directors have been more full informed than our directors about Mr. Ovitz's performance."
"They had a lot of data and would be totally prepared for whatever ensued," he said.
When Schulman pressed if any "analytic and informational document" about Ovitz was presented to the board, Eisner said "this was not a situation like buying a video game company in Germany" that would have required documents with analytical or financial data.
"As a businessman I believe we satisfied the fiduciary duty," he said.
Asked if Ovitz voted on his own no-fault termination package Eisner said: "This wasn't up to him to accept or reject. It was just up to him to pack his bags.
"I was not trying to get his consent on being fired," he said. "I was trying to get his consent on leaving the company in a graceful way."
The trial began here on October 20 and is projected to run into mid-December.
Ovitz, who as co-founder of Creative Artists talent agency was once dubbed "The Most Powerful Man in Hollywood," said in his five days on the witness stand last month that deals he proposed for Disney were aborted by Eisner, and that he felt his friend of 25 years had stabbed him in the back by letting senior Disney executives undermine him.
11/17/2004 - 19:07 GMT - AFP