Disney Shareholder Suit Tossed Out

WILMINGTON, Del. — Walt Disney Co. persuaded a Delaware judge to throw out a lawsuit over ex-President Michael Ovitz’s lucrative severance package because unhappy shareholders failed to prove it was a waste of corporate assets.

Delaware Chief Chancery Court Judge William Chandler dismissed the suit seeking to recoup payments made to Ovitz under a so-called golden-parachute provision in his contract. The judge said shareholders did not prove the provision was a waste of funds and that Disney got nothing of value.

Ovitz received $39 million in cash, along with stock options valued at more than $50 million at current share prices when he left the company in late 1996. The options, which at one point were worth more than $200 million, have fallen in value in the last few months along with Disney’s share price.

Disney’s lawyers also argued that the suit failed to show that the company’s directors were lulled by executives or blinded by conflicts of interest into approving Ovitz’s severance package when he became Disney Chairman Michael Eisner’s second-in-command in 1995.

“I simply do not agree with [shareholders’] characterization of the [agreement] between Ovitz and the company as so one-sided that no businessperson of sound judgment could conclude that Disney received adequate consideration,” the judge said.

An attorney for the shareholders said an appeal is planned.

A Times staff writer contributed to this report.