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Wednesday, November 17, 2004

Eisner testimony continues in Disney shareholder suit
Brandon Smith at 2:46 PM ET

[JURIST] Cross examination of Disney CEO Michael Eisner began Wednesday in a shareholder suit against Walt Disney Co. over whether the executive board neglected its duty to shareholders in allowing former president Michael Ovitz to leave with a $140 million severance package after only 14 months of work. The case threatens to set a high-profile precedent for the business judgment rule which mandates board members' fiduciary responsibility to act in the best interests of company shareholders. Eisner's testimony to date has detailed the bad fit Ovitz turned out to be with Disney. Disney's shareholders have, however, taken exception to Eisner's alleged failure to consult with board members before offering Ovitz the generous severance package, sayaing that Ovitz should have been fired "for cause," thereby avoiding severance pay. The New York Times has more. The Christian Science Monitor has background on the case and its legal ramifications.






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