CEO Defends Decision to Hire Ovitz

Walt Disney Co. Chief Executive Michael Eisner acknowledged Monday that he and former company President Michael Ovitz were good friends.

“Best friends” is another matter.

In his first day testifying in a shareholder lawsuit, Eisner labeled as “hyperbole” Ovitz’s testimony, in which he characterized the two men as practically “life partners” because their families were so close. “I was amused by him,” Eisner said. “He was fun to go to dinner with.”

Shareholder lawyers are seeking to show that Eisner’s relationship with Ovitz skewed negotiations when Eisner hired his friend as Disney’s second in command in 1995 and fired him 15 months later. The lawyers argue that Disney directors let Eisner orchestrate a “no-fault” termination allowing Ovitz to pocket a stock-and-cash severance package they value at more than $140 million.

Eisner, wearing a tie dotted with Mickey Mouse ears, defended his decision to hire Ovitz in the wake of his own heart bypass surgery. “I was very concerned about my own mortality and thought he would be a good candidate,” Eisner said. “He was kind of a man for all seasons. He was really impressive.”

Eisner said he began to search for a strong No. 2 executive after the death of longtime Disney President Frank Wells in a 1994 helicopter crash. Disney’s $19-billion acquisition of Capital Cities/ABC Inc. cemented Eisner’s conviction that he needed someone of Ovitz’s skills.

Eisner said that he drove a hard bargain when he hired Ovitz, then Hollywood’s top talent agent, denying him a co-chairman title and giving him 5 million stock options instead of the 8 million he wanted.