In testimony on Friday, Michael S. Ovitz, the former president of the Walt Disney Company, described an aborted attempt to join the Sony Corporation and was questioned about whether Disney board members were informed about his performance.
Mr. Ovitz was testifying for the fourth day in the trial of a lawsuit filed by shareholders of Disney.
Lawyers for the shareholders say the board breached its fiduciary responsibility when Michael D. Eisner, Disney’s chief executive, hired Mr. Ovitz as president in 1995 and then approved a severance package for him worth $140 million 14 months later.
In testimony this week, Mr. Ovitz said he had sought a job with Sony in the fall of 1996 once he realized that Mr. Eisner and other senior executives would be happier if he left the company.
During questioning by Steven G. Schulman, a lawyer for Disney shareholders, Mr. Ovitz characterized the overture to Sony as a “trade,” in which Sony would agree to buy Mr. Ovitz out of his contract and enter into a strategic partnership with Disney.
Mr. Ovitz said he did not recall details of the potential arrangement with Sony, but said that it involved a possible joint venture with Sony’s record company. Disney owns Hollywood Records, and Mr. Ovitz has said in testimony that he sought to improve Disney’s record business.
“He liked the idea of doing some kind of trade,” Mr. Ovitz said of Mr. Eisner. Mr. Ovitz added later, “That was his win-win suggestion.”
Mr. Schulman also peppered Mr. Ovitz with questions on how often Mr. Eisner talked to directors. Mr. Ovitz said Mr. Eisner “talked to directors a lot.” Lawyers for the shareholders maintain that there was little contact with directors about Mr. Ovitz’s performance.
In Mr. Ovitz’s deposition from November of 2003, he said Mr. Eisner kept directors up to date in “levels,” talking to some more frequently than others. On Friday, Mr. Ovitz said Sid Bass, the Disney shareholder; Irwin Russell, a former director; and Stanley P. Gold, the dissident former director, knew information quickly.
Mr. Eisner met with Mr. Ovitz in mid-November of 1996 and, over the course of more than two hours, discussed Mr. Ovitz’s performance, ethics and management style, according to a Disney memo submitted in the case. The memo, which included notes made by Mr. Eisner about his meeting with Mr. Ovitz, said their partnership was “not going to work.”
Mr. Ovitz said that he did not remember if the board was told about any discussions he had with Mr. Eisner related to his performance. He said the board did not discuss his status at a November 1996 board meeting, which he attended.