Shareholders Appeal Ruling on Disney

Attorneys representing disgruntled Walt Disney Co. stockholders are appealing a Delaware Chancery Court ruling last month that board members acted properly throughout the ill-fated hiring and firing of former Hollywood power broker Michael Ovitz as president.

Court Chancellor William B. Chandler III ruled Aug. 9 that the Disney board did not breach its fiscal duties by agreeing to a decision in 1995 by Chief Executive Michael Eisner to hire then-agent Ovitz, who was fired the following year.

Lawyers representing the shareholders value the cash-and-stock severance package Ovitz received at $130 million. They have been seeking a court order to reimburse that amount to Disney, with interest.

Attorneys at New York-based law firm Milberg Weiss Bershad & Schulman filed a notice of appeal this week with the Delaware Supreme Court.

Disgruntled Disney shareholders had argued that Eisner had ample grounds to fire Ovitz without paying him his severance.

They also accused Ovitz of mishandling his Disney expense account and other miscues, arguing that directors failed to meet their legal obligations by acting as a “rubber stamp” for Eisner, rather than scrutinizing his decisions.

But Chandler, who heard the case without a jury, ruled the directors didn’t violate Delaware corporate law by deferring to Eisner’s decisions on Ovitz, adding that Eisner had acted in good faith.

Chandler also concluded there was no evidence that Ovitz’s expense issues provided a basis for a no-severance termination.

Disney shares fell 27 cents Thursday to $24.95.