October 28, 2005
Disney/Ovitz Case Still in the News
Posted by Bill Sjostrom
First, this past Monday Disney shareholders filed an appeal
of Chancellor Chandler's decision in favor of Disney's board
of directors in the shareholder suit arising out of the Ovitz $140 million
severance payment. Story.
I'm not sure how this squares with earlier reports
that Disney settled the case to avoid an appeal.
Second, Reuters reports that in a recent speech to a directors group Chancellor Chandler called on directors to rein in soaring executive pay:
The entire matter of executive compensation, which seems in some cases to have come spectacularly unhinged from the market for corporate talent, will either be regulated by you the fiduciaries, or by the politicians . . . . If neither the courts nor the markets are able to restrain executive compensation, and if you the decision-makers fail . . . the result will be imposition of regulatory controls.
These are interesting comments considering Chancellor Chandler's ruling in the Ovitz case. They indicate to me that he would have liked to sock it to the Disney board thereby delivering a message to all boards, but, as should be the case, he was constrained by the rule of law, in particular the broad protection afforded boards by the business judgment rule.
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