Walt Disney Co. Chief Executive Michael Eisner on Tuesday said Michael Ovitz’s troubles were rooted in a sense of elitism, pointing to a corporate retreat at which Ovitz rode in a limousine while other executives piled into a bus.
In his second day of testimony at a shareholder lawsuit over the former company president’s severance package, Eisner discussed the problems that eventually brought down Ovitz, who was pushed out of his job as president after just 14 months.
Chief among those problems was Ovitz’s inability to adjust to Disney’s corporate culture, which was far different from the workings of the talent agency that Ovitz had founded, Creative Artists Agency, Eisner said.
“He seemed to be unfocused,” Eisner told the court. “He also came in famous. Everyone expected him to hit it out of the park every time he came to bat. But it wasn’t the same park. I had sympathy for him. I still do.”
Eisner also said Ovitz was resented by other senior executives, who perceived the executive once known as the most powerful man in Hollywood as “a little elitist.”
“He started to rub people the wrong way,” Eisner said. “He was controversial and it got worse as things went on.”
Eisner pointed to a corporate retreat at Florida’s Walt Disney World in January 1996, just months after Ovitz had been hired as president.
At the retreat, there were “embarrassing, difficult moments that became the beginning of a cycle,” he said.
“We’d all take a bus and he had a limousine, a special driver,” Eisner recalled. “Everybody had a walkie-talkie — and you heard walkie-talkies around this 30,000 acres saying, ‘Who was this guy and why was he demanding this?”‘
Eisner said: “The perception was that Michael Ovitz was a little elitist for the egalitarian Walt Disney World employees in Florida. It was a bad vibe, let’s put it that way.”
Over the next several months, Eisner said, relations between other senior executives and Ovitz continued to deteriorate, while Ovitz unsuccessfully tried harder and harder to strike a big, meaningful deal.
Eisner and the board eventually pushed Ovitz out of the company, allowing him to walk away with a $140 million severance package because he was dismissed under a no-fault termination clause.
It is that $140 million — plus interest — that shareholders have demanded be returned to the company, naming Ovitz, Eisner and the board as defendants in their lawsuit.
They claim the board failed to live up to its responsibilities when it granted the severance, and even earlier when he was hired with a lucrative pay package.