Ex-Chief Gave Up Right to Bonuses, Disney Argues

Walt Disney Co. said Friday that former studio chief Jeffrey Katzenberg “is simply not entitled to the enormous sums of money he now demands” because he forfeited future bonuses tied to the performance of Disney movies and TV shows when he left the company in 1994.

Disney’s statement is included in court papers that mark the company’s first formal response to Katzenberg’s lawsuit filed against Disney on April 9, in which he alleges that he is owed more than $250 million in bonuses.

Katzenberg, who joined Disney in 1984 as part of a team that turned around the Burbank-based entertainment giant, was chairman of Walt Disney Studios until leaving the company in a bitter falling out with Disney Chief Executive Michael D. Eisner. Katzenberg is now a partner in the new studio DreamWorks SKG, along with director Steven Spielberg and entertainment mogul David Geffen.

In the papers, Disney says it wanted Katzenberg’s employment agreement to stretch through September of this year when it negotiated a new contract back in 1988.

The company said Katzenberg insisted on an escape clause allowing him to terminate the agreement two years early. Disney says it agreed, but with two conditions: that it have the same option, and that Katzenberg forgo any bonus based on the future performance of movies and TV shows he oversaw if his employment ended in 1994.

“Accordingly, the 1988 contract specifically provides that if Katzenberg elects to leave Disney’s employ in 1994, as he did, he would be entitled only to whatever bonushe may have earned through 1994,” the court papers say.

Disney says that in August 1993, Katzenberg notified Disney of his intent to leave the following year, “having been expressly reminded of the consequences of his decision.”

Katzenberg in his lawsuit alleges that Disney gave him a bonus of 2% of the profits generated by the studio’s movies and TV shows put into production or acquired for distribution in the 10 years he headed the company’s filmed entertainment unit. The heart of the suit, however, is his claim that he was owed 2% of the estimated future value of projects he oversaw while at the company, a payment he alleges should be at least $250 million.

Katzenberg lawyer Bert Fields on Friday disputed Disney’s version, calling it “an absurd interpretation of the agreement” because Disney is arguing that Katzenberg would have terminated 10 years worth of incentive money earned during the period he was Disney’s studio chief.

“If Jeffrey Katzenberg made the agreement they say he made, he would have to be declared insane. Nobody is going to say Jeffrey Katzenberg is insane,” Fields said.

Disney is asking to have the suit dismissed, and have Katzenberg pick up the legal costs.