JURIST - Paper Chase: Delaware court rules for Disney executives in Ovitz severance suit

[JURIST] The Delaware Court of Chancery ruled in favor of Disney executives [decision excerpts via LA Times] Tuesday in a shareholder suit [LA Times report] that alleged that the Disney board violated their duties by ratifying a 1996 decision to fire former company president Michael Ovitz with severance. Shareholders filed suit [JURIST report] objecting to the $140 million severance package given to Ovitz, who only held the position for 15 months. Chief Executive Michael Eisner [Wikipedia profile] fired him and the board approved the dismissal along with the severance payment. The plaintiffs wanted Eisner and the board to reimburse the money to the company, arguing that Ovitz should have been fired for cause instead, and thus would not have received the extra money. The court ruled that while the actions of the directors "fell significantly short of the best practices of ideal corporate governance," the law "cannot hold fiduciaries liable for a failure to comply with the aspirational ideal of best practices." Bloomberg has more. The LA Times provides the full text of the decision [part 1, PDF; part 2; part 3; part 4].

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