Thursday, August 11, 2005


"When does a stupid and very costly mistake by a board of directors amount to a breach of their fiduciary duties? In the US at least, it appears the decision by the board of the Walt Disney Company to hire an inexperienced Michael Ovitz as its second most senior executive and push him out 14 months later with a whopping severance package of $US140 million ($183 million) is acceptable."

"Despite all of the legitimate criticisms that may be leveled at Eisner, especially at having enthroned himself as the omnipotent and infallible monarch of his personal Magic Kingdom, I nonetheless conclude … that Eisner's actions were taken in good faith. By virtue of his Machiavellian (and imperial) nature as CEO, and his control over Ovitz's hiring in particular, Eisner to a large extent is responsible for the failings … that infected and handicapped the board's decisionmaking abilities. Eisner stacked his (and I intentionally write "his" as opposed to "the Company's") board of directors with friends and other acquaintances who .. were certainly more willing to accede to his wishes … than truly independent directors."—Delaware Chancellory Judge William Chandler III (



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