Disney Trial Witness: Eisner Had Authority to Fire Ovitz

GEORGETOWN, Del. – A Walt Disney Co. (DIS) director testified Tuesday that he believed Disney chief executive Michael Eisner (search) had the authority to fire Michael Ovitz (search) as the entertainment giant's president.

In his second day on the stand, Disney director Gary L. Wilson, who is also chairman of Northwest Airlines Corp., said he believed Eisner had the ability to fire Ovitz, a former top talent agent, without first calling a board meeting.

However, Wilson conceded that he wasn't sure if Disney's bylaws required a board meeting. He said he trusted that Sanford M. Litvack, Disney's chief of corporate operations and chief legal officer, would have advised the board if a meeting needed to be called.

"A CEO should be able to terminate the president," Wilson said.

Ovitz, Eisner and several current or former directors, including Wilson, are being sued in the Delaware Court of Chancery over a $140 million severance package paid to 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 Ovitz's employment contract when he joined the company in 1995 and then granting him a nonfault termination that entitled him to the massive severance package when he left just over a year later.

The shareholders claim that Ovitz was ineffective in his job at Disney and could have been fired for cause for excessive spending and habitual lying while at the company.

On Tuesday, Wilson recounted his memories of a trip to the Caribbean over the Thanksgiving holiday in 1996 that he took with Ovitz on the Illusion, a yacht the two men jointly owned. Eisner asked Wilson to convince Ovitz that it was time to leave Disney, Wilson said.

As part of his testimony, Wilson reviewed notes taken by Eisner of a conversation they had via telephone during the trip. As reflected in Eisner's notes, Wilson said he may have used words such as "a caged animal," "loyal friend" and "dangerous foe" to describe Ovitz to Eisner at the time.

Wilson said Ovitz was "emotionally concerned" about his situation at the time and didn't believe Ovitz was willing to leave Disney voluntarily.

"It all boiled down to the fact he wasn't being successful in integrating himself in the culture of the organization," Wilson said.

Wilson said he couldn't recall whether Litvack advised him or the board that Ovitz couldn't be fired for cause. However, Wilson said he didn't believe that could be done under the terms of Ovitz's contract.

"He hadn't done anything wrong, so you couldn't terminate him" for cause, Wilson said.

Also on Tuesday, Academy Award-winning actor Sidney Poitier (search), a Disney director during Ovitz's tenure, began his testimony by recounting how he became an actor after growing up the son of a tomato farmer in the Bahamas and described his lengthy career as an actor, director, producer and screenwriter in the entertainment industry.