Ovitz’s Style Called a Distraction

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The New York Sun

Former Walt Disney Company President Michael Ovitz’s style didn’t mesh well with the deeply ingrained corporate culture, eventually becoming a distraction internally at the entertainment giant, the company’s ex-chief financial officer testified yesterday.


Stephen F. Bollenbach, who now is chief executive and co-chairman of Hilton Hotels Corp., said it became apparent by early 1996 that Mr. Ovitz, a former top talent agent, was having trouble fitting in at the company despite Mr. Ovitz’s best efforts.


Mr. Bollenbach said Mr. Ovitz would “kidnap” Disney Chief Executive Michael Eisner’s ear in public, which made Mr. Bollenbach uncomfortable, and was becoming a distraction to Mr. Eisner. Some executives began ignoring Mr. Ovitz, while others tried to avoid working with him, Mr. Bollenbach said.


“His style was not what people in most big companies were used to,” Mr. Bollenbach said.


Messrs. Ovitz and Eisner and several current or former directors are being sued in the Delaware Court of Chancery over a $140 million severance package paid to Mr. Ovitz when he left Disney after 14 months as the company’s president.


The shareholder derivative lawsuit, which has been in progress for more than seven years, claims Disney’s board failed in its fiscal responsibilities by not properly scrutinizing Mr. Ovitz’s employment contract when he joined the company in 1995 and then granting him a non-fault termination that entitled him to the massive severance package when he left in December 1996. The shareholders claim that Mr. Ovitz was ineffective in his job at Disney and could have been fired for cause for his excessive spending and habitual lying at the company.


Mr. Bollenbach said he didn’t recall anyone at Disney having concerns about Mr. Ovitz’s expenses or believing Mr. Ovitz was untrustworthy in his time at Disney.


As an example of Mr. Ovitz’s style clashes at Disney, Mr. Bollenbach said he was uncomfortable with an event Mr. Ovitz held at Walt Disney World during a management retreat in January 1996. Mr. Bollenbach left Disney in February 1996 after about 10 months with the company.


Mr. Bollenbach said Mr. Ovitz had a group of about 40 executives sit in a circle in a room and discuss who they believed was the most important person in history as part of a brainstorming session.


“In my experience, the techniques were considered odd as opposed to useful,” Mr. Bollenbach said.


Mr. Eisner previously testified that Mr. Ovitz alienated a number of Disney executives at that event by being chauffeured around Disney World by a personal driver rather than take a bus with other executives.


At the same time, Mr. Bollenbach said Mr. Ovitz canceled a number of information sessions he had scheduled to educate Mr. Ovitz on the various working components of the company, which disappointed Mr. Bollenbach.


Mr. Bollenbach said he went through similar sessions when he joined Disney in May 1995 and found them to be helpful. Mr. Ovitz instead went about his own way of educating himself about the company, Mr. Bollenbach said.


However, Mr. Bollenbach said he didn’t believe Mr. Ovitz would be terminated. He certainly didn’t see anything in the four months that he worked with Mr. Ovitz that suggested Mr. Ovitz should be fired for cause, Mr. Bollenbach said.


Mr. Ovitz’s contract only allowed him to be terminated for cause if gross negligence or malfeasance occurred. Mr. Bollenbach said Mr. Ovitz’s problems at Disney were “questions of style,” rather than criminal acts, such as embezzling money.


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