Disney Hired Ovitz Without Board Meeting, Witness Says

Former Walt Disney Co. director Irwin Russell acknowledged Wednesday that the company’s full board and its compensation committee did not meet in advance to discuss the hiring of former President Michael Ovitz.

But, Russell said, he discussed informally the terms of Ovitz’s proposed employment contract with other members of Disney’s compensation committee before Ovitz was hired in August 1995. Russell headed that committee.

Russell’s testimony came in Delaware Chancery Court in a lawsuit that accuses Disney directors of rubber-stamping Chief Executive Michael Eisner’s decision to hire Ovitz.

Shareholder lawyers are seeking to show that the Disney board failed to properly monitor Eisner’s role in the hiring and firing of Ovitz, who left Burbank-based Disney in 1996 after just 15 months on the job. He collected a severance that shareholder lawyers value at $140 million.

Disney directors maintain that they had no grounds to withhold Ovitz’s severance and deny that they failed to oversee Eisner’s decisions.

Russell testified that Eisner briefed other directors on the negotiations with Ovitz and his proposed contract terms.

He said Disney’s board never met to discuss Eisner’s decision to fire Ovitz under the contract’s no-fault provision, which allowed Ovitz to collect the big severance.

“In my opinion, there was no need for a formal meeting,” Russell said.