Disney Holders Sue Over Ovitz’s Severance

Walt Disney Co. stockholders sued current and former Disney board members in Superior Court on Friday, alleging Michael Ovitz’s multimillion-dollar severance agreement is a waste of company assets.

The stockholders claim Ovitz was “undistinguished and unproductive” in his 14-month role as the company’s president, and that the defendants wrongly agreed to pay Ovitz up to “$130 million or more” in severance, according to court papers. News reports have estimated Ovitz’s severance package to be $90 million.

Officials at Disney could not immediately be reached for comment.

Disney announced last month that Ovitz would leave the company Jan. 31, ending a short employment stint that the defendants believe doesn’t warrant his hefty payout.

Claiming breach of fiduciary duty and waste, the plaintiffs want the court to freeze the severance agreement until the lawsuit is resolved.

“Disney will suffer severe and irreparable injury if the (defendants) are permitted to follow through on their intention to . . . honor (the agreement),” the lawsuit alleges.

The severance agreement “has enabled or will enable Ovitz to receive compensation which is so egregiously excessive as to constitute waste and spoliation of Disney’s resources,” the plaintiffs allege.

The defendants include Disney CEO Michael Eisner, former senior executive vice president Stephen Bollenbach, actor Sidney Poitier, who sits on the board, and others.

The plaintiffs allege in the lawsuit that before Ovitz’s departure was announced, Eisner and others should have renegotiated the terms under which Ovitz would leave Disney.