This case involves a derivative lawsuit filed by shareholders because of decisions of the Walt Disney Company’s board.
This case involves a derivative lawsuit filed by shareholders because of decisions of the Walt Disney Company’s board of directors, approving an executive compensation contract for Michael Ovitz, as well as impliedly approving a non-fault termination that resulted in a award to Ovitz (allegedly exceeding $140 million) after barely one year of employment. Michael Eisner, the chief executive officer (CEO) of the Walt Disney Company, had been Eisner’s close friend for over 25 years. Eisner decided to hire Ovitz despite internal memos questioning both the hiring decision and the lucrative compensation terms. However, none of these documents were submitted to the board before hiring Ovitz. In fact, no discussions or presentations were made until the actual meeting where the compensation committee was asked to Ok the agreement. The compensation committee met for just under an hour. All that occurred during the meeting regarding Ovitz’s employment was that one member reviewed the employment terms with the committee and answered a few questions. Immediately thereafter, the committee adopted a resolution of approval.under an hour. All that