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Lawyer: Ovitz Had Conflict of Interest
GEORGETOWN, Del. — Former Walt Disney Co. President Michael Ovitz violated company conflict of interest rules by continuing to accept millions of dollars in commissions from the talent agency he once led, a lawyer suggested today.
Attorney Steven Schulman, representing shareholders in a lawsuit against Disney directors, grilled Ovitz about a document showing he received nearly $28 million in compensation from Creative Artists Agency while working at Disney. Ovitz served 15 months at Disney before he was fired in late 1996.
The document shows that the money stemmed from previously earned commissions from book deals Ovitz negotiated as an agent, and were paid out as part of the deal Ovitz and his two partners, Ron Meyer and Bill Haber, cut when they sold the agency to a group of other CAA agents. Earlier testimony revealed that the three sold the agency for $180 million, paid over four years, with Ovitz receiving 55% of the amount.
But Ovitz told Schulman that, despite his title of president, he was in no position to steer business toward CAA.
"It would have been absolutely impossible for me to do anything with my former agency," Ovitz said. "There were too many checks and balances at the company, notwithstanding the fact that I had no authority at the company."
Schulman's questioning was an effort to show that Ovitz was grossly negligent at Disney, which would have given directors the justification to deny him the hefty severance deal he got. Plaintiffs contend that Ovitz received severance totaling $140 million in stock options and cash, and are seeing to recoup $200 million in payments and interest for the company. Ovitz ended up reaping $109 million because some of his stock options expired.