Walt Disney Co. Chief Executive Michael Eisner kept board members abreast of the negotiations to hire talent agent Michael Ovitz as the company’s president in 1995, former director Stanley P. Gold testified Wednesday.
Gold, who left Disney’s board last year to campaign for Eisner’s ouster, said the chief executive repeatedly briefed him on the pay package Ovitz sought in return for joining Disney. Gold would then brief fellow director Roy E. Disney, nephew of the company’s founder, about the negotiations, he said. Gold has long run Roy Disney’s investment companies.
“I felt Mr. Eisner was keeping me in the loop” about the progress of the Ovitz talks, Gold told Delaware Chancery Court Judge William B. Chandler III. “He told me early in the process it was going to cost Disney a lot of money to get Mr. Ovitz.”
Investors in Disney contend that the company’s board deferred too much to Eisner in connection with Ovitz’s hiring and firing. Plaintiff lawyers value Ovitz’s stock-and-cash severance package at $140 million and are seeking $200 million in cash and interest. They argue that Ovitz could have been fired without severance for poor performance and ethical lapses.
Disney began a search for a new president after the death of Frank Wells in 1994, which Gold said was a big blow to the company. Board members considered entertainment executives, including Barry Diller, who now serves as IAC/InterActiveCorp’s chief executive, and former U.S. Sen. George Mitchell, as replacements. Mitchell now serves as a Disney director.
Other people considered for the Disney post included Bob Daly, the former co-chairman of Warner Bros. studio and former chairman of the Los Angeles Dodgers, and Jeffrey Katzenberg, former chief of Walt Disney Studios, Gold said.
The board didn’t give serious consideration to replacing Wells with Robert Iger, president of Disney’s ABC television network at the time, Gold said. Iger is now Disney’s president and has Eisner’s backing to succeed him when he steps down in 2006.
Eisner told directors in 1995 that “he didn’t have a high regard for Iger” because ABC’s previous top managers didn’t have confidence in Iger’s ability to run the network, Gold said.
Disney spokeswoman Michelle Bergman declined to comment on Gold’s testimony about Eisner’s 1995 evaluation of Iger.
Gold said Disney won acclaim from Wall Street for adding Ovitz to its executive ranks in 1995.