Ovitz Defends Sale of His Jet
Michael Ovitz on Friday defended the sale of a private jet to Walt Disney Co. when he joined in 1995 as its president, testifying that the deal was above board and that he lost money on it.
Ovitz said that Chief Executive Michael Eisner suggested buying the Gulfstream III for $7.8 million because he thought it was a good deal. Ovitz purchased the plane a year earlier for $5 million via a trust he controlled, but he spent $3 million renovating it.
Ovitz’s testimony in Delaware Chancery Court came during cross-examination by lawyer Steven Schulman, representing shareholders seeking to recoup $200 million in Ovitz’s severance payments and interest. The plaintiffs argue that Disney’s directors failed to properly oversee Ovitz’s hiring and firing, and that his conduct on the job justified denying him severance.
As Ovitz’s testimony extended to its fourth day, a minor media circus continued in this town of 4,811 and included a stunt by a local radio station that staged a mock scuffle between Mickey Mouse and Donald Duck characters.
Schulman’s questioning centered on often-minute details of transactions and spending, including asking about a day bed Ovitz had in his office for naps. Schulman’s questioning has been aimed at undermining Ovitz’s credibility by raising questions about his truthfulness and business judgment.
Ovitz was asked about overtures he made to Los Angeles Lakers owner Jerry Buss to buy the NBA team, and an effort to buy the NFL’s Seattle Seahawks.
Disney executives have previously downplayed those efforts, saying the company was never seriously interested. They have characterized any talks as Ovitz acting largely on his own, and said that the NFL prohibited corporations such as Disney from buying teams.
Ovitz also testified that Disney’s directors did not discuss his status at its last board meeting before his firing in 1996, and that he was mistaken in previous testimony that his bonus was linked to Eisner’s. On the jet issue, Schulman questioned Ovitz about an intermediate transaction in which the jet was sold for $6.7 million to a leasing company between the time the Ovitz trust bought it and the time it was sold to Disney. Schulman suggested Ovitz may not have owned the plane when Disney bought it.
But Ovitz’s lawyers said the transaction was simply a sale-lease arrangement done for tax reasons. Ovitz testified that he and his partners in the plane sold the plane to Disney in an arms-length transaction.
